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the State. Any other bill is a foreign bill. Unless the contrary appears on the face of the bill, the holder may treat it as an inland bill.30 Independent of this statutory rule it is now well established that a bill drawn in one State upon a person who is a resident of another State, and payable there, is a foreign bill.31 This doctrine was controverted and was only settled after a considerable discussion by both the courts and text-writers. The reason for the rule is clear. Each State is foreign as to every other, in respect to its individual sovereignty; it is governed by separate laws, having a separate and distinct municipal jurisprudence, and exists as an independent and supreme governing power, except so far as it is controlled and limited by the supreme sovereignty conferred upon the Federal Government by the Con

Indiana.- American Express Co. v. Haire, 21 Ind. 4, 83 Am. Dec. 334; State Bank of Indiana v. Hayes, 3 Ind. 400.

30. Neg. Inst. L. (N. Y.), § 213. The English Bills of Exchange Act of 1882 provides (in § 4) that "an inland bill is a bill which is, or on the face of it purports to be, both drawn Kentucky.— Rice v. Hogan, 8 Dana, and payable within the British islands, 133; Chenowith v. Chamberlain, 6 B. or drawn within the British islands Mon. 40, 43 Am. Dec. 145; Harmon upon some person resident therein. v. Wilson, 62 Ky. 322; Gray Tie & Any other bill is a foreign bill. For Lumber Co. v. Farmers' Bank, 22 Ky. the purposes of that act British L. Rep. 1333, 60 S. W. 537. islands include any part of the United Kingdom of Great Britain and Ireland, the islands of Man, Guernsey, Jersey, Alderney, and Sark, and the islands adjacent to any of them being part of the dominions of her majesty. Unless the contrary appear on the face of the bill, the holder may treat it as an inland bill."

31. United States.-U. S. Bank v. Daniel, 12 Pet. 32, 9 L. Ed. 989; Buckner v. Finlay, 2 Pet. 586, 7 L. Ed. 528; Dickens v. Beal, 10 Pet. 572, 9 L. Ed. 538; Life Insurance Co. v. Pendleton, 112 U. S. 696, 5 Sup. Ct. 314, 28 L. Ed. 866; Armstrong v. Am. Exchange Bank, 133 U. S. 433, 10 Sup. Ct. 450, 33 L. Ed. 747; Lonsdale v. Brown, Fed. Cas. No. 8.494.

Alabama.- Donegan v. Wood, 49 Ala. 242, 20 Am. Rep. 275; Todd v. Neal, 49 Ala. 266: Turner v. Patton, 49 Ala. 406; Quigley v. Primrose, 8 Port. 247.

Florida.- Joseph v. Soloman, 19 Fla. 623.

Georgia.- Hartridge v. Wesson, 4 Ga. 101.

Illinois. Mason v. Dousay, 35 Ill. 424, 85 Am. Dec. 368.

Maine.- Green v. Jackson, 15 Me. 136; Warren v. Coombs, 20 Me. 139; Freeman's Bank v. Perkins, 18 Me. 292; Ticonic Bank v. Stacpole, 41 Me. 302.

Massachusetts. -Phoenix Bank V. Hussey, 12 Pick. 483

Missouri.- Linville v. Welch, 29 Mo.

203.

New Hampshire.- Carter v. Burley, 9 N. H. 558; Grafton Bank v. Moore, 14 N. H. 142; Simpson v. White, 40 N. H. 540.

New York.-Halliday v. McDougall, 20 Wend. 81; Bank of Commerce v. Rutland & W. R. Co., 10 How. Pr. 1; Commercial Bank of Kentucky v. Var num, 49 N. Y. 269.

Oklahoma.- Morrison v. Farmers & Merchants' Bank, 9 Okla. 697, 60 Pac. 273.

Rhode Island.- Aborn v. Bosworth, 1 R. I. 401.

South Carolina.- Duncan v. Course, 1 Const. Rep. 100; Bank of Cape Fear v. Stinemetz, 1 Hill, 44.

Tennessee.-Gardner v. Bank of Tennessee, 31 Tenn. 420.

Virginia.- Brown v. Ferguson, 4 Leigh, 37, 24 Am. Dec. 707.

stitution of the United States.32 It follows therefore that the laws regulating the use of bills of exchange in the several States may differ, and the reasons which exist for treating as foreign a bill drawn upon a resident of another State are the same as those which exist in the case of a bill drawn upon a resident of a foreign country.

b. Distinction between foreign and inland bills. The most important distinction between foreign and inland bills is that the former, if dishonored by nonacceptance, must be protested for nonacceptance, and if dishonored for nonpayment, must be protested for nonpayment.33 It is, however, necessary for other purposes than that of protest to ascertain whether a bill is foreign or inland. In the case of an inland bill the laws regulating its validity are the same notwithstanding the residence of the parties; but in the case of a foreign bill the validity, interpretation, and effect of the instrument will be determined by the laws of the State or country where the obligations of the several parties thereto are to be performed.

c. Determination of question as to what constitutes a foreign bill.— The face of the bill will generally indicate its character. Under the Negotiable Instruments Law and the English Bills of Exchange Act a bill may be treated by the holder as an inland bill unless the contrary appears on its face.34 As a result of this provision, which is apparently new in the English Act of 1882

32. Sir William Blackstone, in his States of the Union in relation to each Commentaries (vol. II, p. 467), distin- other, we are clearly of the opinion guishes foreign from inland bills by that bills drawn in one of these States defining the former as bills drawn by upon persons living in any other of a merchant residing abroad upon his them partake of the character of forcorrespondent in England, or vice eign bills and ought so to be treated. versa; and the latter as those drawn For all national purposes embraced by by one person on another, when both the Federal Constitution, the States drawer and drawee reside within the and the citizens thereof are one, united same kingdom. Chitty (p. 16) and under the same sovereign authority, other writers (Bayley and Kyd) on and governed by the same laws. In bills of exchange are to the same effect; all other respects the States are necesand all of them agree that, until the sarily foreign to and independent of statutes of 8 & 9 Wm. III, chap. 17, each other. Their Constitutions and and 3 & 4 Anne, chap. 9, which forms of government being, though replaced these two kinds of bills on the publican, altogether different, as same footing, and subjected inland bills their laws and institutions. Buckner to the same law and custom of mer- v. Finley, 2 Pet. (U. S.) 586, 7 L. Ed. chants which governed foreign bills, the latter were much more regarded in the eye of the law than the former, as being thought of more public concern in the advancement of trade and commerce. Applying this definition to the political character of the several

528.

are

33. Neg. Inst. Law (N. Y.), § 260. See also as to protest of bills of exchange, post, chap. XV.

34. Neg. Inst. Law (N. Y.), § 213; English Bills of Exchange Act of 1882, 84, subd. 2.

and in the Negotiable Instruments Law, the presumption in each case will be in favor of treating bills of exchange as inland, and the holder of a bill, which, upon its face, does not show its character as a foreign bill, may treat it as inland. It is a well-settled principle of law, independent of the provisions of the statute, that the courts will not take judicial notice of the fact that a city, village, or town, mentioned in a bill as the place where it was drawn or made payable, is located in a foreign country or State.35

Testimony may be admitted to show that a bill which on its face purports to be a foreign bill is in reality an inland bill, and therefore subject to the Stamp Act.36 But, on the other hand, as against a bona fide purchaser without notice, it cannot be shown that a bill purporting to be foreign is an inland bill, or vice versa.37

It has been held in Kentucky that when a bill did not indicate on its face the place where it was drawn, but the evidence and circumstances showed that the drawer resided in Kentucky and the drawee in Ohio, the legal presumption is that it was drawn at the drawer's residence.88

§ 7. Parties to bills of exchange.

A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed and determinable future time, a sum certain in money to, or to the order of, a specified person or bearer. This is the definition contained in the English Bills of Exchange Act,39 and also in the Negotiable Instruments Law.40 No particular form of

35. Kearney v. King, 18 E. C. L. (Eng.) 28; s. c., 1 Chitty, 28; Cook v. Crawford, 4 Tex. 420; Yale v. Ward, 30 Tex. 17; Riggin v. Collier, 6 Mo. 568.

36. Jordaine v. Lashbrooke, 7 T. R. (Eng.) 601; Bire v. Moreau, 2 C. & P. (Eng.) 376; Bartlett v. Smith, 11 M. & W. (Eng.) 483.

37. Towne v. Rice, 122 Mass. 67; Lennig v. Ralston, 23 Pa. St. 137.

A bill of exchange drawn in Michigan in favor of a Michigan payee on a person residing and having his place of business in Illinois, and which was accepted in Illinois, is a foreign, and not an inland bill, notwithstanding the drawee also had a place of business in Michigan, where he spent a portion of his time; and it must be governed by

the law of the State of Illinois in respect to its acceptance. Mason v. Dousay, 35 Ill. 424, 85 Am. Dec. 368.

In the case of Towne v. Rice, 122 Mass. 67, it was held that the maker or indorser of a promissory note cannot, as against an indorsee of the same in the State of Massachusetts for value before maturity and without notice, show that the note, although dated at Boston with intent that it should be a Massachusetts contract, was actually made in New York, and, on account of illegal interest, was void under the usury laws of that State.

38. Harmon v. Wilson, 62 Ky. 322. 39. Eng. Bills of Exch. Act, 1882,

3.

40. Neg. Inst. L. (N. Y.), § 210.

words is necessary to a bill of exchange provided it is made clear that it directs one person to pay a certain sum of money to, or to hold that sum at the disposal of another." The parties to a bill of exchange are (1) the drawer, the person who signs the instrument; (2) the drawee, the person to whom it is addressed, and (3) the payee, the person to receive the money.12 When the drawee has undertaken to pay the bill he is called the acceptor. Sometimes a bill is drawn payable to the drawer, in which case he is the payee, and there are then but two parties to the bill.43 It is provided in both the English Bills of Exchange Act and the Negotiable Instruments Law, which also seems declaratory of the general rule, that where a bill is drawn by the drawer payable to himself, or payable to a fictitious person, or a person not having capacity to contract, the holder may, at his option, treat it either as a bill or note. And a bill drawn by the drawer upon himself as drawee, and made payable to himself, but indorsed to another person, may be treated as a bill of exchange by the indorsee in a suit against the drawer as an acceptor, or it may be treated as the promissory note of the drawer. It seems conclusively established

44

41. Ellison v. Collingridge, 9 B. & C. 570.

42. Byles on Bills (16th ed.), p. 2. 43. Story on Bills of Exchange, § 35. 44. Where in a bill, the drawer and drawee are the same person, or the drawee is a fictitious person, or a person not having capacity to contract, the holder may treat it at his option, either as a bill or a note. English Bills of Exchange Act, 1852, § 5 (2); Neg. Inst. L. (N. Y.), § 214.

As an illustration.-A firm carries on business in London and Liverpool. The London house draws a bill on the Liverpool house. The holder may treat it as a note made by the London house payable in Liverpool; and if it be not paid the omission to give notice of dishonor to the London house is immaterial. Chalmers on Bills of Exchange, § 4, p. 17.

An order drawn by the president of a railroad corporation upon its treasurer, directing the latter to pay to A. B., or order, a specified sum, stated as being the amount due A. B. for work done by him as contractor, in building a section of the corporation's railroad, is in effect a promissory note, and may be declared on as such. It is not a bill of exchange because it lacks

the essential elements of two parties; i. e., a drawer and drawee. Fairchild v. Ogdensburgh, etc., Ry. Co., 15 N. Y. 337.

45. England.- Miller v. Thomson, 3 M. & G. 576, in which case Lord Tindal said: "There is an absence of the circumstance of there being two distinct parties, as drawer and drawee, which is essential to the constitution of a bill of exchange. See also Ex p. Parr, 18 Ves. 69; Shuttleworth v. Stephens, 1 Campb. 407; Allan v. Manson, 4 Campb. 115; Harvey v. Kay, 9 B. & C. 356, 364; Dehers v. Harriott, 1 Show. 159; Starke v. Cheesman, Carth. 509; Robinson v. Bland, 2 Burr. 1077.

Alabama.- Brazelton v. McMurray, 44 Ala. 323;. Hart v. Shorter, 46 Ala. 453; Capital City Ins. Co. v. Quinn, 73 Ala. 558. But such a bill in the hands of an indorsee is a bill of exchange Randolph v. Parish, 9 Port. (Ala.) 76.

Georgia.- Patillo v. Mayer, 70 Ga. 715; Lewis v. Harper, 73 Ga. 564; De Vaughn v. Hangabook, 73 Ga. 809.

Indiana.- Wardens, etc., of St. James Church v. Moore, 1 Ind. 289.

Kentucky.- Rice v. Hogan, 8 Dana (Ky.), 133; Bradley v. Mason, 6 Bush (Ky.), 603.

as a general rule, independent of statutory provision, that an instrument may be a bill of exchange although the drawer and drawee are the same persons; and that such an instrument may be sued on either as an accepted bill or as a promissory note.*7

§ 8. Bills in a set.

46

a. When made. There is usually but one copy made of an inland bill; but foreign bills are often made in sets. The Negotiable Instruments Law provides that "where a bill is drawn in a set, each part of the set being numbered and containing a reference to the other parts, the whole of the parts constitute one bill." 48 The reason for making foreign bills in sets is that the danger of miscarriage is thus decreased; if one or more of the bills is not delivered some one of the others may arrive at its proper destination. The custom of making foreign bills in sets has become so common that in some cases the purchaser or person in whose favor they are made may demand, as a matter of right, that they be made in sets.49

b. Form of parts. The parts of a bill of exchange in a set are made on separate pieces of paper, each part being numbered and referring to the other parts.50 Each part should contain a condition, that it shall be paid, provided the others remain unpaid, and is generally in the following form: "Pay to A. B. or order, for value received, this my first of exchange (the second and third

Maine.- Cunningham v. Wardwell, the obligation to give a set is pre12 Me. 466. sumably a matter of bargain. ChalMassachusetts.- Com. v. Butterick, mers on Bills of Exchange (5th ed.), 100 Mass. 12, 97 Am. Dec. 65.

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Texas.- Planters' Bank of Tennessee v. Evans, 36 Tex. 592.

46. Harvey v. Kay, 9 B. & C. 356, 364 (per Bayley, J.); Wildes v. Savage, 1 Story (U. S.), 22, Fed. Cas. No. 17,653; Randolph v. Parish, 9 Port. (Ala.) 76.

47. Funk v. Babbitt, 156 Ill. 408, 41 N. E. 166. See also Bunting v. Mick, 5 Ind. App. 289, 31 N. E. 378, 1055.

48. Neg. Inst. L. (N. Y.), § 310. See Appendix, post. See also English Bills of Exchange Act of 1882, § 71. 49. Chalmers says that in England

p. 235.

Chitty says: "If a person has engaged to deliver a foreign bill, it seems that he is bound, on request, to deliver as many parts of it as may be applied for; but if the drawer only give one bill, he will, if it should be lost, be obliged to give another of the same date to the loser." Chitty on Bills, p. 154.

The German Exchange Law, art. 66, provides that the payee is entitled to demand a set from the drawer; and if a bill issued singly be destroyed or lost, the indorsee can obtain a second of exchange by addressing himself to his immediate indorser, who applies to the indorser before, and so on up to the drawer.

50. Byles on Bills (16th ed.), p. 137.

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