Putnam's Handy Law Book for the Layman Part 4
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=Check.=--A check should be properly signed. A check signed by an individual with the word "agent," "treasurer," or other descriptive term, has sometimes been regarded as the check of the individual signer, and not that of a princ.i.p.al or company. The proper way is to sign the name of the princ.i.p.al or company, adding the name of the person by whom this is done, thus: "John Smith by John Doe, agent," or "The Atlas Co. by John King, Treasurer," or other official designation.
The statement will not accord with the view of many a reader, that a bank on which a check is drawn is under no legal agreement with the holder to pay it, whether the maker has a sufficient deposit or not.
Consequently, should the bank refuse to pay, the holder has no cause of action against the bank. The agreement to pay is between the bank and the depositor, and if the bank fails to fulfill its agreement with him, he has a just cause for complaint. Sometimes a bank declines to pay supposing, through an error of bookkeeping perhaps, that the depositor has not money enough there to pay his check. In such a case, as the bank is in the wrong, if the depositor has suffered from loss of credit or in any other way from the bank's action, it must respond and make the loss good.
Suppose a person presents a check and the maker's deposit is not enough to pay the full amount, what can be done? Usually the bank declines to pay. Suppose the holder says he is willing to give up the check and take the amount in the bank? There is no reason why the bank should not accede to his wishes. Suppose a bank should pay more than the amount on deposit through no fraud of the holder, from whom can it recover the amount? If the holder has been free from wrong in presenting the check, the bank cannot look to him, but to the drawer for repayment. If the maker of a check has no money in the bank, perhaps he may not be a depositor, he commits a fraud in making and giving his check to another, and the offense in many states is deemed a crime: likewise a person who receives such a check knowing its true nature is equally deep in the wrong.
The law is very strict in its requirement of banks when paying the checks of customers. After a check has been delivered and has therefore pa.s.sed beyond the maker's control, the law requires the greatest care on the part of a bank in paying it. The bank must be especially careful in examining the signature and the amount, and if the signature has been forged, or the amount changed, the bank is liable for an improper payment. Once an employer gave his trusted clerk a post-dated check, which he was to present on the day specified, and, after drawing the money, was to pay this to his employees. The clerk changed the date to an earlier one, drew the money, kept it and fled. The court said the bank should have detected the alteration. The bank contended that had the clerk waited until the proper day, and then drawn the money, it would not have been liable.
The court said that was not the case presented, the clerk did not wait. Banks suffer, far more than the public knows, from the payment of raised checks, for it is quite impossible always to detect them, yet banks are held liable therefor.
There are two rules relating to the payment of checks worth mentioning. One is, the maker of a check should use proper precaution in making it. He should write in a way that will not be likely to confuse the paying official. For instance, if in the above case the maker, intending to give a post-dated check, had written the date so imperfectly that the teller was misled, the bank would not have been liable for paying it, or for refusing to pay because there was not money enough in the bank at the time of presentation for payment. Some persons are very careless in making figures; when they are, they cannot look to the bank for the ill consequence of their own neglect.
Again, if a bank paid forged checks, for example, which were returned with other checks on the balancing of a depositor's book, and months, perhaps years afterward, the depositor discovered the forgeries or forged indors.e.m.e.nts, he could, notwithstanding the lapse of time, demand of the bank the sums wrongfully paid. This was a great hards.h.i.+p to banks, and has been corrected in many states by statutes and by the courts in others. The rule now is, the depositor must, within a reasonable time after the return of his bank book, examine it, also his checks, and, if payments have been improperly made, demand immediate correction.
The holder of a check should demand payment within a reasonable time after he has received it. He may keep it longer if he pleases, but if he does, and the bank should fail, he cannot demand payment again from the maker of the check. He in effect says to the holder of the check when giving it to him, "present this check to the bank within the proper time and it will be paid, if you keep it longer, you do it at your risk." What is a reasonable time? The law has fixed it. If the bank is in the town or city where the holder of the check dwells, he must present it the day he received it, or the next day. If it is drawn on a bank outside, the check must be forwarded for presentment at the latest on the day after it is received. With respect to the first cla.s.s of checks therefore if the maker and receiver are both depositors of the same bank, the operation on the part of the bank consists simply in debiting one account and crediting another with the amount; if checks are drawn on another bank in the same city the receiver usually deposits them in his own bank and they are paid through the clearing house the next day.
A drawer may stop the payment of his check. And when he requests the bank to do so it must heed his instruction, and is liable if neglecting, though not always for the whole amount of the check.
Suppose the check was given for a bill which the maker actually owed, yet for some reason, after giving the check, he did not wish to pay.
If it was actually due and undisputed it would be hardly just to require the bank to pay the check over again to the holder, this would be too much. But for whatever injury the maker of the check may have sustained the bank must make good.
When a check has been certified by the bank on which it is drawn, the effect of the certification after the drawer has parted with it "is precisely as if the bank had paid the money upon that check instead of making a certificate of its being good." The check is charged up to the maker, or should be, and therefore as between him and the bank has been paid.
=Citizen.=--In modern usage this means a member of the body politic who owes allegiance to the nation and is ent.i.tled to public protection. One may be a citizen of the United States without being a citizen of any state, for example, a citizen of the District of Columbia, or the territory of Alaska. Citizen-s.h.i.+p implies the duty of allegiance to the government, and the right of protection from it. A citizen of the United States who resides in a state owes a double allegiance, and can demand protection from each government. For the ordinary rights of person and property he looks to the state for protection. The rights for which he can seek the protection of the United States are only such as are established by the const.i.tution and federal laws. For some purposes even a corporation may be included within the term citizen, for example the right to sue in the federal courts as a citizen of the incorporating state.
By the fourteenth amendment of the federal const.i.tution, all persons born in the United States and subject to its jurisdiction are citizens of the United States. In 1855 Congress pa.s.sed an act conferring citizens.h.i.+p on alien women who should marry American citizens. An American woman therefore who marries an alien takes the nationality of her husband. When her marital relation ends she may elect to retain her marital or her original citizens.h.i.+p. Since minor children follow the status of their parent, by the marriage of an alien widow to an American citizen, her children also become American citizens.
An alien may be naturalized. To do this he must have continuously resided in the United States for five years before his application, and he must have appeared in court at least two years before, and there declared his intention to become a citizen of the United States and to renounce allegiance to his former sovereign. He must prove by the oath of at least two persons his residence, also during that time that he has behaved as a man of good moral character and attached to the principles of the federal const.i.tution. He must take an oath to support and defend the const.i.tution and laws of the United States and renounce allegiance to any foreign prince. The naturalization of a person confers citizens.h.i.+p on his minor children if dwelling in the United States, also on his wife, unless she is of a race incapable of American citizens.h.i.+p.
The rights of aliens, from the very beginning of the American government, have been expanded by treaty provisions and by liberal legislation. In nearly all the states resident aliens were given the right to take t.i.tle to land, whether by deed or by inheritance, to hold such real estate and to transfer it by law or by descent. In some states they were given the right to vote and hold office. And at common law they were ent.i.tled to purchase, own and sell personal property, engage in business and to make contracts and wills. By the fourteenth amendment to the federal const.i.tution their rights and privileges have been further secured.
Aliens owe to the country in which they reside a temporary and limited allegiance, that is, an obligation to obey its laws and subject themselves to the jurisdiction of the courts. A non-resident alien is not within the terms of the fourteenth amendment, indeed it is doubtful if he can ask any aid or relief under the state or federal const.i.tutions. A statute therefore imposing a higher inheritance tax on property pa.s.sing to a non-resident alien than on his property if he resided here is valid. Non-resident aliens can acquire no rights incident to residence here except as permitted by the federal government. This power may be exercised, either through treaties made by the president and senate, or through statutes enacted by congress.
So congress has excluded not only diseased, criminal, pauper and anarchist immigrants, but also contract and Chinese laborers.
=Contracts.=--At the outset the various kinds of contracts should be explained so that the principles which apply to them may be better understood. One of the divisions is into simple contracts and specialties. A simple contract may be verbal or it may be in writing, but no seal is appended to the signatures of the parties. A specialty is in writing and a seal is added to the signature. A written contract may be a duplicate of another with a seal, yet the two belong to different cla.s.ses and different rules of law apply to them as we shall learn.
Another cla.s.sification is into executed and executory contracts. An executed contract, as the name implies, is completed, an executory contract is to be executed or completed. An unpaid promissory note is an executory contract, when paid it becomes an executed one.
Another cla.s.sification is into express or implied contracts. An express contract is one actually made between two or more persons or parties; an implied contract is one that the law makes for the parties. Suppose a man worked a day for another at his request, and nothing was said about payment, the law would require him to pay a reasonable sum for his day's work. Another kind of contract technically called quasi contract differs somewhat from an implied contract and will be explained in another place.
To every contract there must be two or more parties, who have the legal right to make it. Not every person therefore who wishes to make a contract can legally do so. Of those whose ability to contract are limited are minors or infants. The period of infancy is fixed by law, and is therefore a conventional, yet needful regulation. In most states infancy ends at the age of twenty-one, though some states fix a younger period, eighteen for women. A person becomes of age at the beginning of the day before his twenty-first birthday. The reason for this rule is, the law does not divide a day into a shorter period or time except when this is required in judicial proceedings. Another cla.s.s of incapable contractors are married women. Their disability however has been largely removed by statutes in all the states, as we shall learn in another place.
Insane and drunken persons also are under disability to make contracts. By the old law a drunken man who made a contract was still liable, and required to fulfill as a penalty for his conduct. A more humane rule now prevails and he can be relieved, though like a minor, if he wishes to avoid a contract, he must return the thing purchased, in other words he can take no advantage of his act to the injury of the other contracting party. If however he has given a negotiable note that has pa.s.sed into the possession of an innocent third person, who did not know of his drunkenness at the time of making it, he can be held for its payment. It is not quite so easy to state rules that apply to insane persons because their conditions vary so greatly. A person may be insane in some directions and yet his insanity may not be of a kind affecting his capacity to make at least some kind of contracts. Again, he may have lucid intervals during which he is quite as capable of contracting as other persons. And again when an insane man has made a contract, the relief to which he is ent.i.tled depends on circ.u.mstances. In some cases he may repudiate it, a partial fulfillment only may be required.
The law has much to say about the consideration that is an element in every contract; in other words, there must be a cause, something to be gained by the parties in every contract to sustain it. If A should promise to give to B a house next week, and on the day fixed for transferring it A should change his mind, he could not be compelled to transfer it, for the promise would be without any consideration or thing coming from B. But if the house had been transferred, A could not afterwards repent of his act and demand its return. An executed gift therefore, free from all fraudulent surroundings, is valid: the donor of an executory gift is free to withhold its execution.
A consideration need bear no relation or adequacy to the other thing that is to be received. Nothing is more frequent than a one-sided contract, in which one party has gained far more than the other. If the law attempted to adjust these cases, many more courts would be needed than now exist.
We will briefly note the need of consideration in some cla.s.ses of cases. First, a voluntary undertaking to work for another without compensation cannot be enforced. Under this head is the promise to pay the debt of another. Why should one do such a thing? Let us remember that should one make such a promise and keep it, the money could not be recovered back, that is quite another thing. Again, if A owed B a debt and delayed payment, and B should say to him, "if you will pay me half of it next week I will give up the rest," B would not be bound by his promise. Suppose that B learning that A had ample means to pay, should sue him, A could not relieve himself from liability by offering to pay the amount A promised to take in settlement of the debt. But should B accept one half, in fulfillment of his promise, that would be the end of the matter.
Again should a bank defaulter make good the amount taken, and the directors, in consideration thereof, promise to take no steps towards his prosecution by the government, there would be no valid consideration to sustain the promise. The state would be just as free to prosecute him as before. Very often such criminals are not prosecuted after returning all or a part of their unlawfully taken money, nevertheless no settlement of this kind stands in the way of prosecution.
Suppose A agreed to work for B for a month and, after working a week, should leave him without good reason, can he recover for his week's work? If he can get anything, he cannot claim it under his contract for he has broken it and therefore a court could not enforce it. If he can recover anything it is on the implied contract which the law makes, the worth of his work after deducting the loss to his employer.
Suppose the employer should prove that he had lost more by A's going away when he did than he had gained by his week's work, he could recover of B, for the rule works both ways. In some states he cannot recover anything, for, having broken his contract, he has no standing in court.
Suppose one signs his name to a subscription paper, calling for the payment of money, to build a church, for example, and the designated amount has been subscribed, can a subscriber refuse to pay? He cannot. Suppose he withdraws before the subscriptions have been completed, what then? He can refuse. If a subscription has not been completed, death operates as a revocation and the subscriber's estate is not held for the amount. Sometimes a moral obligation to pay money is a good consideration for a promising to pay it. Thus if one owes another for a bill of goods, and the debt has ceased to be binding by lapse of time, yet he should afterwards promise to pay, he could be held on his promise because there was a good consideration for the debt. Lastly a contract may be modified by mutual agreement without another consideration.
Another element in a contract is mutuality, a meeting of minds in the same sense. In every contract there is an offer made by one party and an acceptance or refusal by the other. When an acceptance occurs, there is a meeting of minds, or an a.s.sent. Very often the parties do not understand each other, they acted hastily, ignorantly perhaps, their minds did not really meet in the same sense. In such cases there is no contract.
Generally the acceptance must be at the time of receiving the offer.
If it is not, there is no meeting of minds, no a.s.sent. A person however may make an offer on time, this is common enough. When this is done the other party must furnish some kind of consideration to make the offer good for anything, otherwise the offerer can withdraw his offer whenever he pleases. Many an offeree has been disappointed by the action of the other party in withdrawing his offer, yet the offerer has been clearly within his rights in doing so when he has received no consideration for giving the other party time to think over his offer.
An eminent jurist has said "that an offer without more is an offer in the present to be accepted or refused when made. There is no time which a jury may consider reasonable or otherwise for the other party to consider it, except by the agreement or concession of the party making it. Until it is accepted it may be withdrawn, though that be at the next instant after it is made, and a subsequent acceptance will be of no avail."
If no time is given, or no consideration for the time given, an offer therefore may be withdrawn as soon as made if not accepted. A person may suddenly think of something which leads him to withdraw his offer as soon as it is out of his mouth, and in doing so is within his rights, but if he does not, how long does his offer last? A reasonable time. What this is depends on many things, one of the questions like so many others in the law to which no definite answer can be given. An offer to sell some real estate was accepted five days afterward, this was held to be within a reasonable time. One can readily imagine cases in which five days would not be thus regarded, or even five hours.
When does a.s.sent occur in contracts made by correspondence? The rule is in nearly every state (Ma.s.sachusetts being the chief exception) where an offeree has received an offer by letter and has put his acceptance in the postoffice, the minds of the parties have met and made a contract. The post-office is the agency of the offerer both to carry his offer and bring back the return. If the offeree should use a different agency, the telegraph for instance, to convey his acceptance, it would not be binding until the offerer had received and accepted it. Of course, an offerer by letter may withdraw his offer at any time. Suppose he should receive an acceptance by letter or telegraph but deny it, and insist that no contract had been made. Then the controversy would turn on the proof. If the acceptance had been by letter, and the offeree could prove that the offeree had written and mailed it, the offeree's proof would be complete. If the offeree sent a telegram, then he would be obliged to prove the delivery of the dispatch. Suppose one should mail a letter of acceptance, but before its receipt by the offerer, should send a telegram declining the offer which was received before the letter of acceptance? The acceptance would stand, for as there had been a meeting of minds when the letter was put into the postoffice, the offeree could not afterwards withdraw his offer. A person who makes an offer cannot turn it into an acceptance. An old uncle wrote to his nephew that he would give thirty dollars for his horse and added, "If I hear no more about the matter, I consider the horse is mine." The game did not work, for no man can both make and accept an offer at the same time, and that is what the foxy uncle tried to do.
Offers and rewards are often made through the newspapers. Thus the owner of a carbolic smoke ball offered to pay a specified sum to any one who suffered from influenza after using one of his smoke b.a.l.l.s in accordance with directions if he was not cured. A person who failed to receive the benefit advertised recovered the reward. Two other cases may be mentioned that ill.u.s.trate the uncertainty of the law. An excited farmer offered the following reward, "Harness stolen! Owner offers $100 to any one who will find the thief, and another $100 to prosecute him!" The farmer cooled off and declined to pay after the thief was caught and the court relieved him, declaring that his advertis.e.m.e.nt was not an offer to pay a reward, but simply an explosion of wrath. In another case a man's house was burning, and he offered $5,000 to any one who would bring down his wife dead or alive.
A brave fireman accomplished the feat. This offerer too cooled off and declined to pay, but he did not escape on the ground that this was only an explosion of affection, and was obliged to pay.
Lastly a contract dates from the time of acceptance, and is construed or interpreted by the law of the place where it was made. If it is to be performed in another place, then the parties must be governed by the law of that place in performing it.
A contract having been made, next follows its execution. When a contract is not executed, or not executed properly, the party injured usually may recover his loss. Sometimes the contract states what the offending or wrongful party must pay should he fail to execute it.
Many questions have arisen from such agreements. Suppose a contractor agrees to build a home for another and to finish it within a fixed time, and, failing to do so, shall forfeit or pay to the other $5,000 as a penalty for his failure. One would think that if he failed to execute it the other party could demand the $5,000. But the courts have a way of their own in looking at things. Suppose the contractor's failure did not in fact result in any loss whatever to the other party? The courts in such a case are very reluctant to enforce the agreement. If there had been a loss, something like that amount, then the courts would compel him to pay. In other words, the most general rule is, notwithstanding such a clearly written agreement, the courts seek to do justice between the parties. Whenever the parties do not attempt to fix the damages themselves, should their contract not be fulfilled, then the amount that may be recovered depends on a great variety of circ.u.mstances. Suppose a woman should go to a store to buy a piece of silk. She asks if the piece shown to her by the saleswoman is all silk, who makes an affirmative reply. The buyer knows much more about it than the saleswoman, which is often the case in buying things, and knows it is half cotton, can the buyer recover anything?
Surely she has not been deceived. The seller may have tried to fool her but did not, and having failed, the buyer has no legal ground for an action. On the other hand, if the buyer was ignorant, knew nothing about silk and had been deceived by the seller, then she would have a clear case. This is one of the fundamentals in that large cla.s.s of cases growing out of deceit. The party seeking redress, must have been deceived, and also injured by the deceit in order to recover. The remedies that may be employed whenever contracting parties have failed, or partly failed to fulfill their agreements or promises will be considered under other heads. See _Deceit_; _Drunkenness_; _Quasi Contract_.
=Corporations.=--There are many kinds of corporations. Those most generally known are business corporations; and though many of them are very large, legally they are private corporations. A railroad corporation, though performing a public service, nevertheless is a private corporation.
Public corporations are formed for governing the people and are often called munic.i.p.al corporations. They are created or chartered by the legislatures of the states wherein they exist. Formerly, all private corporations in this country were granted charters by the legislative power, and many corporations are doing business by virtue of the authority thus granted to them. More recently general statutes have been enacted whereby individuals may form such corporations without the aid of a legislature. Authority has been conferred on the courts, secretary of state, or other official to grant to individuals, who may apply for them, charters on complying with the requirements of these statutes. There are other kinds of corporations, religious, charitable and the like; only one other need be mentioned, to which the term quasi has been applied. These resemble corporations in some ways, and this is the reason for calling them quasi corporations. A county or school district is such a corporation. The supervisors of a county, or the trustees of a school district, can make contracts, own and manage real estate for their respective bodies, sue and be sued like the officers of other corporations.
By the general comity existing between the states corporations created in one state are permitted to carry on any lawful business in another, and to acquire, hold and transfer property there like individuals.
FORMATION OF CORPORATIONS.
Formerly charters were granted to corporations for a long term of years, or forever. The policy of the law has changed in this regard, and the duration of their existence is limited to a comparatively short period. The life of a national bank is only for twenty years; at the end of that period the charter is renewed, and the charters of the older national banks have been renewed several times. Perpetual charters are infrequently granted, and some of the older ones have been limited by legislative or judicial action. A private corporation had perpetual authority to build and maintain a bridge across the Susquehanna River at Harrisburg, nor could any other company build one within the distance of ten miles above or below. Notwithstanding this clear and exclusive grant, another company was formed which attempted to build a bridge within a mile of the other. The old company tried to prevent by law the new company from building the bridge. The court said that "perpetual" did not mean literally perpetual, but a long time, that the old company had enjoyed its exclusive grant a long time, long enough, and that the new company was justified in its undertaking.
A corporation has no heirs like an individual; it continues through succession, one sells his interest or stock to another, and thus it lives to the end of its charter unless it fails or, through some other event, comes to an end. Suppose a stockholder buys all the stock of the other members, does the corporation still exist? It does for a limited time. How long? No court has answered this question. It depends on the particular case. The courts also say, that he can sell his stock to other individuals and thus practically revive a dying corporation. A stockholder who had bought all the stock of a corporation claimed that he should be taxed as a corporation, which was at a lower or favored rate than that paid by individuals. The court said the game would not work, that for the purposes of taxation the concern must be regarded as an individual. So the stockholder knew more after that decision than he did before.
CAPITAL.
Every private corporation has a capital composed usually of money, which is advanced or paid by its members or shareholders. Among the reasons for forming corporations two may be stated. It is a way for collecting money from many sources needful for an enterprise; the many contributors are like the small streams that unite and create a great reservoir. The other reason is, the contributors are free from the liabilities that attach to every member of a partners.h.i.+p for its entire indebtedness. A stockholder may indeed, if his corporation does not succeed, lose a part or all of the capital he has contributed, but no more or only a fixed amount, as will be hereafter explained.
Almost anyone can subscribe for stock, with a few limitations. A minor cannot subscribe for stock, nor can his guardian act for him.
Putnam's Handy Law Book for the Layman Part 4
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Putnam's Handy Law Book for the Layman Part 4 summary
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