Evening Republican, Volume 17, Number 195, Rensselaer, Jasper County, 16 August 1913 — LAW MAKES NOTE PAYABLE AS CHECK. [ARTICLE]

LAW MAKES NOTE PAYABLE AS CHECK.

If Maker Has the Funds On Deposit Xn Bank When Note Is Due ' "It Must Be Paid.

In order to prevent possible confusion and difficulty owing to the changes In business methods made necessary by the act of the last legislature relative to negotiable paper, the Indianapolis Clearing House association, by itsrmanager, George C. Culvert, is sending out a notice to business men as follows: “At the last session the Indiana legislature enacted what is known as the negotiable instruments law, which is a codification of the law, relating to checks, drafts and notes. This act marks some important changes in the law as- it previously existed in Indiana. Your especial attention is called to one such change effected by Article VI, Section 87, which follows: \ . “When the instrument (promissory note or acceptance) is made payable at a bank it is equivalent to an order to the bank to pay the same for the account of the principle debtor thereon.” ‘The attorney general gives it as his opinion, as have other lawyers who have been consultet, that under this law, when a note or acceptance is made payable at a bank and the bank has sufficient funds of the maker or acceptor of deposit, it must pay the obligation on demand at maturity unless it has specific instruction from the maker or acceptor to withhold payment. Thus, in its legal effect, a note or acceptance payable at a bank become®/at maturity practically a check on the bank where it is payable, and in the absence of positive instructions to the contrary (as in the case of a check on which payment has been stopped), the bank must pay it on proper demand if the maker or acceptor has funds on deposit sufficient for that purpose. “This law became effective on its promulgation April 30, 1913, and therefore controls all notes or acceptances executed on that or a subsequent date.” Heretofore notes payable at banks have not been paid by the banks from the funds of the persons who gave the notes, except on specific instruction. The reversal of this order, it is feared, will cause annoyance to business houses with possible overdrafts and resulting confusion, unless the intent Of the new law is thoroughly understood. Banks are notifying the drawers of notes payable at the banks of the date they become due, and hope in that manner to prevent confusion, but in order to help in making the situation clear, the clearing house is addressing its circular to all busness houses in reach.