|
(a) The Board of
Governors has reconsidered a ruling made in 1917 that demand notes are
ineligible for discount under the provisions of the Federal Reserve
Act. (1917 Federal Reserve Bulletin 378.)
(b) The basis of that ruling was the provision in the second
paragraph of section 13 of the Federal Reserve Act that notes, drafts,
and bills of exchange must have a maturity at the time of discount of
not more than 90 days, exclusive of grace. The ruling stated that a
demand note or bill is not eligible under the provisions of the act,
since it is not in terms payable within the prescribed 90 days, but,
at the option of the holder, may not be presented for payment until
after that time.
(c) It is well settled as a matter of law, however, that
demand paper is due and payable on the date of its issue. The
generally accepted legal view is stated in Beutel's Brannan on
Negotiable Instruments Law, at page 305, as follows:
The words on demand serve the same purpose as words making
instruments payable at a specified time. They fix maturity of the
obligation and do not make demand necessary, but mean that the
instrument is due, payable and matured when made and delivered.
(d) Accordingly, the Board has concluded that, since demand
paper is due and payable on the date of its issue, it satisfies the
maturity requirements of the statute. Demand paper which otherwise
meets the eligibility requirements of the Federal Reserve Act and this
part Regulation A, therefore, is eligible for discount and as security
for advances by Reserve Banks.
|
Software
