LECTURE XLIV.

OF NEGOTIABLE PAPER.

(1.) Of the history of bills and notes.

IT is the general opinion, that the commerce of the an cients was carried on without the use of bills of exchange, and there is no vestige of them in the Roman law. A passage in the Pandects" shows it to have been the practice with the creditor who lent money on bottomry, or respondentia, to a foreign merchant, to send his slave to receive the loan, and maritime interest, on the arrival of the vessel at the foreign port. This certainly would not have been necessary, says Pothier, if bills of exchange had been in use. But, however the fact may have been with the Romans, it would seem, from a passage in one of the pleadings of Isocrates, that bills of exchange were sometimes resorted to at Athens, as a safe expedient to shift funds from one country to another.

Bills

a Dig. 22. 2. 4. 1.

b Traité du Con. de Change, No. 6.

e See the pleading of Isocrates, entitled, Trapeziticus. (Isocratis Scripta omnia, edit. H. Wolfius, Basle, 1587.) In that interesting forensic argument which Isocrates puts into the mouth of a son of Sopaus, the governor of a province of Pontus, in his suit against Pasion, an Athenian banker, for the grossest breach of trust, it is stated, that the son, wishing to receive a large sum of money from his father, applied to Stratocles, who was about to sail from Athens to Pontus, to leave bis money, and take a draft upon his father for the amount. This, said the orator, was deemed a great advantage to the young man, for it saved him the risk of remittance from Pontus, over a sea covered with Lace

of exchange are of such indispensable use in the remittance of the value of money between distant places, without risk and expense, that foreign commerce cannot conveniently be carried on without them, and they grew into use on the coasts of the Mediterranean in the fourteenth century." As they serve the purposes of cash, and facilitate commerce, and are the visible representatives of large masses of property, they may truly be said to enlarge the capital stock of wealth in circulation, as well as increase the trade of the country.

Promissory notes are governed by the rules that apply to bills. The statute of 3d and 4th Anne, made promissory notes payable to a person, and to his order, or bearer, negotiable like inland bills, according to the custom of merchants. That statute has been generally adopted in this country, either formally, or in effect, and promissory notes are every where negotiable." The effect of the statute

dæmonian pirates. It is added, that Stratocles was so cautious as to take security from Pasion for the money advanced upon the bill, and to whom he might have recourse if the Governor of Pontus should not honour the draft, and the young Pontian should fail.

a In 1394, the city of Barcelona, by ordinance, regulated the acceptance of bills of exchange; and the use of them is said to have been introduced into western Europe by the Lombard merchants, in the thirteenth century. M. Boucher received from M. Legou Deflaix, a native of India, a memoir, showing that bills of exchange were known in India from the most high antiquity. But the ordinance of Barcelona is, perhaps, the earliest authentic document in the middle ages of the establishment and general currency of bills of exchange. (Consulat de la Mer, par Boucher, tom. 1. 614. 620.) M. Merlin says, the edict of Louis XI. of 1462, is the earliest French edict on the subject; and he attributes the invention of bills of exchange to the Jews, when they retired from France to Lombardy. The Italians, and merchants of Amsterdam, first established the use of them in France. Repertoire de Jurisprudence, tit. Lettre et Billet de Change, sec. 2. In England, reference was made, in the statute of 5 Rich. 2. c. 2. to the drawing of foreign bills. This was in the year 1381.

b By the N. Y. Revised Statutes, vol. 1. 768. sec. 1-6, promissory notes payable in money to any person, or to the order of any person, or

is to make notes, when negotiated, assume the shape and operation of bills, and to render the analogy between them so strong, that the rules established with respect to the one, apply to the other." It was a question much discussed before the statute of Anne, whether notes were not, by the principles of the law merchant, to be treated as bills, and Lord Holt vigorously and successfully resisted every such attempt." The history of that struggle is no longer interesting; but there is no doubt that promissory notes were recognised as mercantile instruments, and a species of bills of exchange, by the canon law, and the usage of trade; and even by the

to bearer, are negotiable in like manner as inland bills of exchange, according to the custom of merchants. The payee and endorsee of every such note payable to them or their order, and the holder of every such note, payable to bearer, may sue thereon in like manner as in cases of inland bills of exchange. If such notes are made payable to the order of the maker, or to the order of a fictitious person, and be negotiated by the maker, they have the same effect and validity, as if made payable to bearer. Promissory notes are negotiable throughout the Union, and the endorsee can sue in his own name. In Massachusetts, Virginia, South Carolina, Alabama, and most of the states, he has all the privileges of an endorsee under the law merchant. But in Vermont, NewJersey, Pennsylvania, Kentucky, and Indiana, his rights under the law merchant are to be taken with some qualification, and especially in the two states last mentioned. See Griffith's Law Register, passim. 1 Minor's Alabama Rep. 5. 296. In Indiana, promissory notes payable at a chartered bank within the state, are by statute placed on the same footing as inland bills of exchange by the law merchant. But other promissory notes are not governed by the law of merchant, which has never been applied in that state by statute to them. Bullitt v. Scribner, 1 Blackford's Ind. Rep. 14. The lex mercatoria, applicable to foreign and inland bills of exchange, is considered to be adopted in Indiana as part of the common law of England, which has been adopted by statute. Piatt v. Eads, 1 ibid. 81.

a Heylyn v. Adamson, 2 Burr. Rep. 869. Brown v. Harraden, 4 Term. Rep. 148.

b Clerke v. Martin, 2 Lord Raym. 757.

French ordinance of 1673, long before Lord Holt asserted them to be of late English invention."

My object in the present lecture is to endeavour to take a comprehensive, and, at the same time, precise and accurate view of the general doctrine, and most material rules relative to bills and notes; and to effect this purpose, I shall point out their essential qualities; the rights of the holder; the negotiation of them, and the requisite steps to fix the responsibility of the several parties whose names are upon the paper.

(2.) Of the essential qualities of negotiable paper.

A bill of exchange is a written order or request, and a promissory note a written promise, by one person to another, for the payment of money, absolutely, and at all events. If A., living in New-York, wishes to receive 1000 dollars, which await his orders in the hands of B., in London, he applies to C., going from New-York to London, to pay him 1000 dollars, and take his draft on B. for that sum, payable at sight. This is an accommodation to all parties. A. receives his debt by transferring it to C., who carries his money across the Atlantic, in the shape of a bill of exchange, without any danger or risk in the transportation, and on his arrival at London, he presents the bill to B., and is paid. This is the

a The pragmatic of Pope Pius V. De Cambiis, as early as 1571, is mentioned by Mr. Du Ponceau, in his Dissertation on the Nature and Extent of the Jurisdiction of the Courts of the United States, p 122. as proof of the early recognition of notes as negotiable instruments within the custom of merchants. I would also refer to the appendix to 1 Cranch's Reports, for a very elaborate argument, in favour of the position, that at common law, and before the statute of Anne, an endorsee of a promissory note could sue a remote endorser.

b This definition is taken from Bayley on Bills, p. 1. which is a concise, clear, and accurate production. The American edition, published at Boston, in 1826, is enriched with all the English and American decisions in its very copious notes.

As

plain and familiar illustration of this mode of remittance, given by Sir William Blackstone; and the practice is so very convenient, and suggests itself so readily, and gives such extension to credit, and circulation to capital, that it would seem almost impossible that it should not have been in use in the earliest periods of commerce. A., who draws the bill, is called the drawer. B., to whom it is addressed, is called the drawee, and, on acceptance, he becomes the acceptor. C., to whom the bill is made payable, is called the payee.a the bill is payable to C., or his order, he may, by endorsement, direct the bill to be paid to D., and in that case, C. becomes the endorser, and D., to whom the bill is endorsed, is called the endorsee, or holder. A check partakes more of the character of a bill of exchange than of a promissory note. It is, in form and effect, a bill of exchange. It is not a direct promise by the drawer to pay, but it is an undertaking on his part that the drawee shall accept and pay, and the drawer is answerable only in the event of the failure of the drawee to pay. A check payable to bearer passes by delivery, and the bearer may sue on it as on an inland bill of exchange.

A bill or note is not confined to any set form of words. A promise to deliver, or to be accountable, or to be responsible for so much money, is a good bill or note, but it must be exclusively and absolutely for the payment of money. In England, negotiable paper must be for the payment of money in specie, and not in bank notes. In this country, it has been held, that a note payable in bank bills was a good negotiable note within the statute, if confined to a species of paper uni

a An instrument may be a bill of exchange, though the drawer and drawee be the same person. Harvey v. Kay, 9 B. & Cress. 356. b Cruger v. Armstong, 3 Johns. Cas. 5. Conroy v. Warren, ibid. 259. Woods v. Schroeder, 4 Harr. & Johns. 276.

c Morris v. Lee, 2 Ld. Raym. 1396. 8 Mod. Rep. 362. Str. 629. Martin v. Chauntry, Str. 1271. Thomas v. Roosa, 7 Johns. Rep. 461.

d Bayley on Bills, edit. Boston, 1826, p. 6.