4. Of $2,400 for 3 yr. 10 mo. 20 da. at 5%.

5. Of $360 for 4 yr. 4 mo. 12 da. at 6%.

6. Of $480 for 3 yr. 9 mo. 24 da. at 8%, interest compounded semiannually.

7. Of $237.50 for 1 yr. 11 mo. 15 da. at 12%, interest compounded quarterly.

8. Of $3,875 for 2 yr. 11 mo. 12 da. at 6%, interest compounded semiannually.

Answers. (1) $266.24; (2) $229.11; (3) $308.46; (4) $501.78; (5) $104.49; (6) $167.65-; (7) $61.90-; (8) $738.48—.

PARTIAL PAYMENTS.

57. A debt or obligation may be discharged at one payment; or, from time to time, payments in part may be made, and finally at a time of settlement the remainder of the debt may be paid. Now, it is obvious that interest should be allowed upon such payments as are made, since interest is charged upon the obligation itself. But, if a payment should be less than the interest upon the debt since a previous payment had been made, to subtract such payment from the debt with accrued interest would result in increasing the principal. This would be a species of compound interest which, in many States, is illegal.

58. When a partial payment of a note is made, the date of payment and its amount are written upon the back of the note, and this record of it is called an indorsement.

The following rule for partial payments has been formu lated by the Supreme Court of the United States, and has been adopted by most of the States:

59. United States Rule.-I.

Find the amount of the

principal to the time when the payment, or the sum of the

payments, is greater than the interest then due. From the amount subtract the payment or the sum of the payments, and treat the remainder as a new principal.

II. Proceed in this manner to the date of settlement, and the last amount will be the sum still due.

60. To compute partial payments by the United States rule.

EXAMPLE.

$1,200.

New York, Sept. 16, 1895.

On demand I promise to pay John Crawford, or order, Twelve Hundred Dollars, with interest at 6%, value received.

Edward G. Carson.

Indorsements: Jan. 1, 1896, $120; May 7, 1896, $300; Dec. 22, 1896, $16; Sept. 19, 1897, $400. What was due Jan. 1, 1898?

SOLUTION.

Principal.....

$1200

Interest from Sept. 16, '95, to Jan. 1, '96 (3 mo. 15 da.) ...

21

Amount......

1221

First payment...

120

New principal.....

1101

Interest from Jan. 1, '96, to May 7, '96 (4 mo. 6 da.).....

23.12

Amount..

Second payment.

1124.12

300

New principal......

Interest from May 7, '96, to Sept. 19, '97 (1 yr. 4 mo. 12 da.)

Interest from Sept. 19, '97, to Jan. 1, '98 (3 mo. 12 da.)......

Amount due at time of settlement..

In this example, 360 days are considered as 1 ment of $16 is less than the interest due at the time it was made; hence, according to the rule, it is added to the next payment of $400 and the interest is computed to the time of the fourth payment.

61.

EXAMPLES FOR PRACTICE.

Find the amount due at the time of settlement on each of

the following:

1. $2,000.

Philadelphia, July 1, 1896. One year after date, for value received, I promise to pay Wm. Gray, or order, Two Thousand Dollars, with interest at 6%.

Henry G. Brown. Indorsements: Dec. 16, 1896, $350; Mar. 1, 1897, $25; Oct. 25, 1897, $400; June 14, 1898, $275. Time of settlement, July 1, 1899,

2. A note for $3,000 at 6% dated Mar. 5, 1892, bore the following indorsements: Dec. 20, 1892, $400; Mar. 14, 1893, $60; Nov. 30, 1893, $360; July 15, 1894, $600. Time of settlement, Jan. 1, 1895.

3. A note for $4,000 at 6% dated Sept. 1, 1886, is indorsed as follows: Jan. 1, 1887, $500; July 1, 1887, $450; Jan. 1, 1888, $90; Sept. 1, 1888, $800. Time of settlement, Jan. 1, 1889.

4.

Face of note, $3,600, rate 8%, dated May 1, 1890. Indorsements: Dec. 1, 1890, $600; Mar. 1, 1891, $100; Dec. 1, 1891, $800; July 1, 1892, $1,000. Time of settlement, Dec. 1, 1892.

Answers

(1) $1,216.80; (2) $2,024.38; (3) $2,625.50; (4) $1,691.36.

When the time from the date of a note or other obligation is less than a year, settlement is usually made by a method called the merchants' rule.

62. The Merchants' Rule.-I. By the method of exact interest, find the amount of each of the several pay ments from the time each is made to the date of settlement.

II. Subtract the sum of these amounts from the amount of the obligation from its date to the time of settlement. The remainder will be the amount still due.

EXAMPLE.-Face of note, $2,000; rate, 6%; date of note, Dec. 31, 1888: time of settlement, Nov. 15, 1889. Indorsements: Mar. 10, 1889, $200; June 1, 1889, $300; Aug. 20, 1889, $400; Oct. 1, 1889, $500. What was due at time of settlement?

*Table XX, § 4, will be found very useful for finding the number of days between two dates.

EXAMPLES FOR PRACTICE.

63. Solve the following examples by the merchants' rule:

1. Debt, $5,000; rate, 5%; date of note, July 1, 1894; date of settlement, June 15, 1895. Indorsements: Sept. 10, 1894, $1,000; Dec. 12, 1894, $800; Mar. 12, 1895, $1,200; May 1, 1895, $1,200. What is due at

the time of settlement?

2. Face of note, $8,400; rate, 4%; date of note, Jan. 1, 1897; time of settlement, Oct. 20, 1897. Indorsements: Mar. 30, 1897, $1,600; June 1, 1897, $800; Aug. 10, 1897, $2,000; Sept. 15, 1897, $3,000. What is due on the note at time of settlement?

3. Debt, $5,000; rate, 6%; date of note, Nov. 1, 1897; time of settlement, May 20, 1898. Indorsements: Dec. 20, 1897, $900; Jan. 1, 1898, $1,200; Mar. 24, 1898, $1,200; Apr. 20, 1898, $400. What is due at time of settlement?

Answers. (1) $957.67; (2) $1,193.60; (3) $1,401.41.

PROMISSORY NOTES.

64. A promissory note is a written promise to pay a certain sum at a certain time.

65. The maker or drawer of a note is the person that promises to pay; the payee is the person to whom the note is payable; and the holder is the person that owns it.

66. The face of a note is the sum promised to be paid. This sum should be written both in figures and in words.

67. Notes are of two kinds-notes bearing interest, and notes not bearing interest. When no rate of interest is specified, the legal rate in the state or county where the note is made is to be understood. If a note not bearing

interest is not paid when due, it bears interest at the legal rate after that time until paid.

68. The legal rate of interest for money varies in the different states of the Union and depends on two facts:

1. The rate per cent. prescribed by statute in each state must be used when no other rate is agreed upon; this prescribed rate is as low as 5% in some states and as high as 8% in others.

2. If the rate is agreed upon by contract it can be no higher than 6% in some states, and is without any limit in others. Call loans by banks in New York and Pennsylvania which are loans that may be called in at the pleasure of the bank-may command any rate agreed upon, provided the loan is $5,000 or more.

69. The punishment for usury-which is an interest charge higher than the admissible legal rate-involves various penalties, from the forfeiture of the excess of interest to the forfeiture of both principal and interest.

70. If a debt falls due on a Sunday or on a legal holiday or half holiday, some states require that it shall be paid on the day before, and some on the day following the legal holiday or half holiday.

71. Every state has a statute of limitation according to which, after the expiration of a certain time, a claim for money does not hold in law. This time is different for notes, closed and open accounts, judgment notes, and sealed documents involving claims for money.

72. Rates per cent., penalties for usury, payments with respect to holidays, and statutes of limitation are changed so frequently that any table showing them at a given time is soon out of date. The student who wishes information relative to any of these matters can get it at any bank; hence, it is deemed best to omit it from this treatise.

73. A note should be so written as to show where it was made and when, the sum promised to be paid, whether it