never be paid except to the person or persons named in the instrument. When it is found that an error has been made in the amount or name of the payee of a voucher or check sent to a branch for payment, they should be returned at once, unpaid, with a statement of the facts in the case, so that the matter may be corrected.

Under no circumstances should a check or voucher be changed or defaced, new ones should be issued by the proper person.

If, for any reason, payment is not to be made to the person in whose name a voucher is made, the fact should be noted on the face of the bill, also on the back of the voucher, underneath the filing, giving the reason therefor, and the name of the person to whom the money is to be paid. This indorsement (except in the case of transfer orders attached) should be signed by the person or persons certifying the voucher and should be satisfactory in every respect to the treasurer, otherwise payment should be withheld awaiting satisfactory explanation.

In order that a company may avail itself of the advantage arising from discounting their bills on condition of prompt payment, the following expeditious method of providing for their settlement is suggested.

Bills that accrue at branches and department headquarters should be approved and paid by the proper officer. When paid, they should be stamped on the back, and forthwith remitted to the main office as cash.

No person should be authorized to pay any bill, voucher, certificate of discharge, or other evidence of debt against a company, except under established rules, on accounts duly audited and approved.

In the event, however, it should become necessary in the course of business, for a manager or agent to pay money in advance of the approval of the document, it may be done upon the written direction of the treasurer or chief accounting officer.

In such cases the manager should be directed to make the payment and take a receipt therefor, holding the latter, with the order directing the payment, until a voucher can be audited relieving him of the charge.

This voucher should be prepared without delay, and should be made in the name of the person to whom the money is paid.

This voucher should pass through the same channel as other vouchers, and be treated, so far as the methods of approving and auditing are concerned, as if unpaid. On the back of said voucher, however, under the proper filing, the maker should plainly note in red ink,

Mgr. at No. 4 Branch," a similar notation being

"Paid by
made on the face of the voucher.

When money is paid in this way the receipt taken by the manager should describe the purpose of the payment.

This receipt should be technically legal in form. When the approved voucher reaches the manager the receipt should be attached thereto by him, also the order.

The voucher should be remitted without delay as the rules describe. When such payments are made direct from branch or main office, the vouchers should be treated in the same way.

Cancellation of Vouchers.

When the books are closed and the statement of audited bills entered upon the general books, any error in the amount of a voucher may be corrected, or the voucher itself may be cancelled and withdrawn from the Voucher Record by simply cancelling the entry on such record. Afterward no correction is possible; if an error has been made in the amount, the instrument should be formally cancelled and a new voucher made.

When it is desired to cancel a voucher after the books are closed, it should be given to the chief accountant, so that the cancellation may be made on the books in due form.

Vouchers requiring to be cancelled after the books are closed should never be torn up or destroyed, as they are required for filing. In case it is necessary to cancel a voucher, the request therefor should be noted on the back, giving the reason. This should be signed officially.

In cancelling vouchers, the amount should be credited to the account originally charged.

When it is desired to cancel or change a voucher before the books are closed, it should be referred back to the various persons upon whose books it appears, so that they may cancel or change the entry thereon.

Specific reference should be made in the voucher record to each voucher cancelled, and the reason for cancellation given.

Taking Receipts-How Endorsements Should Be Made and Receipts Signed.

Receipts to vouchers, acknowledgements for money, property, or other considerations, and all endorsements on the back of time tickets,

orders, drafts and checks, etc., should correspond in every particular with the name of the person or persons in whose favor the instrument is made. For instance, if a document is made in favor of "Henry Schmidt," a receipt or endorsement should not be accepted signed by "Henry Smith." The practice of the United States Government in the case of vouchers, drafts, and checks is founded on correct methods, and should be observed in connection with all such documents. It is as follows:- "The name of the payee, as endorsed, must correspond in spelling with that on the face of the warrant; no guarantee of an endorsement, imperfect in itself, can be accepted. If the name of a payee, as written on the face of the warrant, is spelled incorrectly, the warrant should be returned for correction."

Vouchers may be paid upon the presentation of an order properly drawn by the payee, or by the legal and binding representative of such payee. The authority should in every case be securely attached to the voucher.

Documents in favor of corporations should be signed by the duly authorized agent or officer of such corporation, the name and title of the person being given in full in every instance.

Signatures should be witnessed in all cases by some responsible person when the payee is not personally known.

Endorsements by mark should not be witnessed by a cashier or manager, if the acknowledgement is for money paid by him.

When a payee cannot write, he should make his mark in legal form in lieu of a signature. This mark should be witnessed by some responsible person personally known to the payee.

Checks, drafts, notes, bills of exchange and kindred documents should in all cases be endorsed by the payee. Orders should not be

accepted in such cases.

Those who make payments should be held strictly responsible for the bona fide character of the receipt or acknowledgement and the payment of the money to the proper person or company.

When checks and drafts are received they should be stamped on the back, viz., "For deposit only," then should follow the name of the firm or company. Underneath this endorsement the name of the cashier, agent or others in authority should be signed.

If the draft or check is stamped immediately upon its receipt, its subsequent destruction or miscarriage can not involve a company in loss; stamping it in the manner described also prevents its misuse.

Signatures should never be inserted with a stamp. Some dis、 tinguishing mark or name should be written with pen and ink.

It should be remembered, that the signing by one person for another is not binding unless duly authorized, and whenever a person signs for another, the name of the person signing should be given.

If a person having a power of attorney signs, he should attach to his signature, "Attorney in fact;" if he signs as trustee, administrator, agent or otherwise, the fact should be duly stated beneath his signature.

It is the duty of the disbursing officer who accepts such signature, to satisfy himself at the time that the person signing is duly qualified.

It should be kept constantly in mind, by all who pay money, that while it is easy for them to assure themselves of the creditability of those to whom they pay before the transactiou occurs, it is often difficult or impossible afterward. Men are ever willing to substantiate their right to receive money, if required to do so before the transaction. Afterward they are indifferent in many cases, and the burden of proof rests with the payor instead of the payee.

Collateral Security and Collateral.

By commercial usage, not only negotiable instruments, but also 'documents of title, quasi or non-negotiable in character, are available as collateral security for loans of money, or discounts of paper. The terms adopted, both in commercial circles and by jurists, describing such transactions-" collateral security" and "collateral," as distinguished from a mere pledge-illustrate the development of this special branch of the law, and emphasize the importance of the questions relative to the rights, duties and liabilities incurred by parties to such contracts of loan, secured by collaterals.

"Collateral Security" is a separate obligation, as a negotiable bill of exchange or promissory note of a third person, or document of title, or other representation of value, endorsed where necessary, and delivered by a debtor to his creditor, to secure the payment of his own obligation, represented by an independent instrument. Such collateral security stands by the side of the principal promise as an additional or cumulative means for securing the payment of the debt.

"Collateral," in the commercial sense of the word, is a security given in addition to a principal obligation, and subsidiary thereto; and is generally descriptive of all choses in action, as distinguished from tangible personal property including the usual negotiable instruments of commerce; the quasi-negotiable securities, as certificates of stock, bills of lading, and warehouse or cotton receipts; and the diverse

non-negotiable choses in action and equitable assignments available as collateral.

The regular course of banks and bankers in discounting commercial paper, to receive the promissory notes of third persons as collateral security for the payment of the principal note given by their customers, is a recognized form of collateral security. Upon asking for such discount, it is usual for the pledger in his principal note to. recite therein the collateral securities deposited, and the terms and manner in which the same may be sold or made otherwise available, upon default. Such recital does not affect the negotiability of the principal note, as the amount to be paid, the time, and the person to whom, remain the same. Where a note, pledged as collateral security, recites on its face that it is "to be held as collateral security for the payment of certain notes," of third persons, it is non-negotiable, even in the hands of a bona fide endorsee, for value, lacking certainty in amount, and being a contingent promise.

Bonds and Coupons as Collateral.

Negotiable bonds, payable to bearer, or "holder," issued under statutory authority, by municipalities or corporations, are negotiable instruments, the title to which passes by delivery. The delivery of such bonds by the pledgor to the pledgee, as collateral security, before maturity, for a valuable consideration, vests the full legal and equitable title in the latter. The same rule applies to dissevered coupon notes or warrants issued with bonds payable to bearer. When separated from the bond, such coupons cease to be mere incidents of the bonds, and become independent negotiable instruments, the title to which passes by delivery.

Delivery of negotiable instruments, to be held as collateral securities, is an essential condition of the validity of the act of pledge. In this respect there is no difference between a pledge of personal property and one of negotiable securities.

The holder of negotiable instruments as collateral security, receiving the same so as to become a party thereto, does not lose his right and title thereto, nor the proceeds thereof, by a redelivery of the same to the pledgor where such a delivery is made with the intention or upon the agreement that the pledgor shall proceed, for and on behalf of the pledgee, to make collection thereof, or do some other proper and necessary act in respect thereto.

When collection of collaterals is the object, the pledgor is regarded