John Brown.

Sec.2.  A note thus payable to Smith or bearer, or to him or his order, is called negotiable, because it may be sold or transferred to any other person, who has the same power to sue for and collect the money, as Smith, the original promisee.  If it were made payable to Smith or order, he must indorse it by writing his name on the back of it, before it would pass as a negotiable note.  The indorsement is considered as the order of Smith to the maker to pay it to any other person.  But, though not negotiable, it might be transferred; but the holder must sue in the name of Smith, and Brown might offset any demands which he has against Smith.

Sec.3.  An indorsement, made by writing the name only on the back of a note, is called a blank indorsement.  A full indorsement is one which points out the person to whom the note is to be paid.  A blank indorsement may be filled up at any time by the holder.  For example:  A note is payable to “John Jay or order,” or to “the order of John Jay,” who indorses it in blank which makes it payable to any other holder.  Now if any holder or indorsee wishes it paid to any particular person, he fills up the blank by writing a request to that effect above the name of the indorser, thus:  “Pay to George Bruce,” or “Pay to George Bruce or order;” who, again, may by indorsement order it paid to some particular person.  Or, if he should indorse it in blank, or order it paid “to the bearer,” it would again pass, as at first, by mere delivery.

Sec.4.  In common business transactions in the country, notes intended to be negotiable are usually made payable to bearer, as in the form given.  (Sec.1.) The young reader, or other person inexperienced in business, may not know why they are not always so written.  The making of a note payable to order protects the holder or owner in case the note should be lost.  Take, for example, the note supposed in the preceding section, indorsed in blank.  Suppose the owner resides in Buffalo, and the maker in Detroit.  The owner writes over the name of John Jay, “Pay to George Bruce,” also residing in Detroit, to whom it is sent by mail, to be by him presented to the maker for payment.  And should the note by accident or fraud fall into the hands of another, it being payable to Bruce only, or to his order, the parties are protected from loss.

Sec.5.  As a contract is not binding without a valuable consideration, (Chap.  LIV, Sec.6,) the words “value received” are inserted in notes, as evidence of such consideration.  But where there is no statute requiring the insertion of these words, a note is good without them.  Whether they are inserted or not, the note is presumed to have been given for a valuable consideration; and the maker, to avoid his obligation to pay it, must make it appear that no value was received.