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bank payable after its date and subsequent to its issue is not a check, but a bill of exchange.?

d. Drafts by one bank upon another bank in another State.It is customary in the transaction of banking business for one bank to issue drafts upon a bank located in another State. In such cases it is often important to ascertain whether such drafts are to be considered as checks or bills of exchange. But few. cases have


2. In general.- Treating generally they stand almost alone, the Supreme of an instrument dated on a certain Courts of Rhode Island (Westminster day, and by some form of words made Bank v. Wheaton, 4 R. I. 30) and payable at a day certain thereafter, it perhaps of Tennessee, being, so far as is probable that between the array of we know, the only ones which have opposing authorities, the preponder- adopted similar views. All other ance will be considered to lie in favor courts which have passed upon the of the doctrine that such paper is not question, as well as the text-writers, to be considered as a check, but as an have almost uniformly laid it down inland bill of exchange, and therefore that such an instrument is a bill of entitled to days of grace. Morse on exchange, and that an essential char. Banks and Banking, p. 262.

acteristic of a check is that it is pay. Forms of drafts declared bills of ex. able on demand. Harrison v. Nicollet change.-An instrument addressed to Nat. Bank, 41 Minn. 488, 43 N. W. a bank: “Pay to M. C. J. & Co., or 336, 16 Am. St. Rep. 718, 5 L. R. A. order, five hundred dollars, on 22nd 746. October.

The following Massachusetts cases $500. (Signed) E. W. & Co.,” dated may also be cited in favor of the propoOctober 12, is a bill of exchange, and sition that such instruments as such entitled to grace. Ivory v.

checks: Taylor v. Wilson, 11 Metc. State Bank, 36 Mo. 475, 88 Am. Dec. 44; Way v. Towle, 155 Mass. 374, 29 150. As is also a draft in the follow. N. E. 506. ing form: “ "W. & B.: Pay to L. L. B.

Bills of exchange and not checks.on the 13th of July, 1853, or order, The following cases are to the effect three hundred dollars.” Morrison y.

that such instruments are bills of exBaily, 5 Ohio St. 13, 64 Am. Dec. 632. change: So 'also is a draft in the following 25 U. S. 213, 6 L. Ed. 606; Bank of

United States.- Ogden v. Saunders, form:

Washington v. Triplett, 26 U. S. 25, “ $199.92.

7 L. Ed. 37; Bell v. First Nat. Bank, Minneapolis, Minn., Mch. 27, 1888. 115 U. S. 373, 29 L. Ed. 409.

On April 14th, pay to the order of California.- Minturn v. Fisher, 4 E. Harrison, One Hundred and ninety- Cal. 36. nine, and 92-100 dollars.

Delaware. - Work Tatman, 2 J. T. HARRISON. Houst. 304; Bradley v. Delaplaine, 5 To Citizens Bank,

Harr. 305. Minneapolis, Minn.” Harrison Georgia.— Henderson v. Pope, 39 v. Nicollet Nat. Bank, 41 Minn. 488, Ga. 361, reaffd. sub nom, Georgia Nat. 43 N. W. 336, 16 Am. St. Rep. 718, 5 Bank v. Henderson, 46 Ga. 496. L. R. A. 746.

Illinois.- Cutter v. Reynolds, 64 Ill. Conflict of authority.- The question 321. as to whether an instrument so dated New York.- Murray v. Judah, 6 is a check or a bill of exchange has Cow. 484; Woodruff v. Merchants' given rise to considerable discussion Bank, 25 Wend. 673; Bowen v. Newell, and some conflict of opinion. The two 8 N. Y. 190; Pope v. Bank of Albion, principal authorities holding such an 57 N. Y. 126. instrument a check are Re Brown, 2 Ohio.- Morrison v. Bailey, 5 Ohio Story, 502, Fed. Cas. 1,985 and Cham- St. 13, 64 Am. Dec. 632. pion v. Gordon. 70 Pa. St. 474. Both of Oregon.— Hawley v. Jette, 10 Ore. these are entitled to great weight, but 31, 45 Am. Rep. 129.

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arisen where this question has been discussed. The settled opinion seems to be, however, that such drafts are checks and the parties thereto are subject to the same liabilities and possess the same rights as though such drafts were drawn upon a particular bank or banker by an individual.


$ 17. Bills of lading.

a. Definition.— It is customary to treat bills of lading as commercial paper. They have many of the characteristics of such paper, and many of the general rules and principles affecting the rights and liabilities of parties to such paper are applicable to them. A bill of lading has been defined as an instrument issued by a common carrier to the consignor of goods, consisting of a receipt therefor, and an agreement to carry them from the place of shipment to the place of destination. A paper signed only by the consignor, stating the shipment, and intrusted to the master of a vessel, is not a bill of lading."

b. Negotiability.— Bills of lading are sometimes called quasinegotiable because they are transferable by indorsement, although they do not call for the payment of money. But it is also well

3. A check drawn by a bank in one 5. Covill v. Hill, 4 Den. (N. Y.) State on a bank in another, in dupli. 323, affd. in 6 N. Y. 374; Gage v. cate, is not a bill of exchange. Mer- Jacqueth, 1 Lans. (N. Y.) 207; Babchants' Nat. Bank v. Ritzinger, 118 cock v. Orbison, 25 Ind. 75. Ni. 484, 8 N. E. 834. See also Harri- Where vendors of corn, with the inson v. Wright, 100 Ind. 515, 58 Am. tention of sending it in their boats Rep. 805; Roberts v. Corbin, 26 Iowa, to the vendee, executed an instrument 315, 96 Am. Dec. 146; First Nat. Bank containing a recital of the shipment of Cincinnati v. Coates, 3 McCrary, of the corn, its quantity, the freight (U. S.), 9; Bull First Nat. due upon it, the terms of payment Bank of Kasson, 123 U. S. 105, of the purchase money, and the name 8 Sup. Ct. 62, 31 L. Ed. 97; Morrison of the boat by which it was sent, and v. Farmers & Merchants’ Bank, 9 Okl. stating that the corn was to be de697, 60 Pac. 273; Bowen v. Needles livered as addressed, viz., to M., the Nat. Bank, 87 Fed. 430.

vendee, care of D. & C., without delay, 4. Freeman v. Graemer, 63 Minn. it was held that this constituted a 242, 65 N. W. 455.

bill of lading. Dows V. Rush, 28 Daniel (Neg. Inst., Vol. 2, § 1728) Barb. (N. Y.) 157. defines a bill of lading as “ a written 6. Merchants' Bank v. Union, etc.,

acknowledgment by the master of a Co., 69 N. Y. 373. A bill of lading is ship, or the representative of any negotiable to this extent: that it is common carrier, that he has re- transferable by assignment or indorseceived the goods therein described ment, and that the transferee takes " for the voyage or journey stated, to all the rights against the carrier that “ be carried upon the terms and de- it conferred on the consignee, or the “livered to the persons therein speci- person to whose assigns or order the "fied. It is at once a receipt for the goods are to be delivered. Hunt v. "goods which renders the carrier re- Mississippi Cent. R. R. Co., 29 La. "sponsible as their custodian, and an Ann. 446. See also Tison v. Howard,

express written contract for their 57 Ga. 410; Robinson v. Stuart, 68 Me. transportation and delivery.” 61; Balt. & Ohio R. R. Co. v. Wilkens,



settled that goods shipped by a bill of lading drawn to the order of the shipper may be transferred by delivery of the bill without indorsement.? The assignment of a bill of lading passes title to the goods described therein, if made in good faith and for a valuable consideration. The bill is symbolic of the goods described, and when so assigned confers upon the assignee all the rights of the assignor in such goods ;9 and it has also been held that the bona fide transferee for value of a bill of lading, indorsed by the shipper or his consignee, and put into circulation by the authority of the shipper or his consignee, has an absolute title to the goods, freed from the equitable rights of the unpaid vendor to stop in transitu as against the purchaser.10 Generally speaking, however, the quasi-negotiability of such bills does not extend to allowing the possessor thereof to transfer property in the chattels, except by virtue of a title or authority from the true owner." The rule that a bona fide purchaser of a lot or stolen bill or note, indorsed in

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44 Md. 11, 22 Am. Rep. 26; Chandler selves. Lickbarrow v. Mason, 2 Term v. Belden, 18 Johns. (N. Y.) 157, 9 R. (Eng.) 63, 6 East, 21, 1 Smith's Am. Dec. 193.

Lead. Cas. 879. 7. Merchants' Bank v. Union, etc., 9. Bill of lading as evidence of title. Co., 69 N. Y. 373; Emery v. Irving - An assignment and delivery of a Nat. Bank, 25 Ohio St. 360, 18 Am. bill of lading is equivalent in legal Rep. 299, in which last case the court force to the sale and delivery of tlie said: By the rules of commercial goods. It is documentary evidence of law, bills of lading are regarded as title in and to the property specified symbols of the property therein de in it, and conclusive as against all the scribed, and the delivery of such bills parties to it in the hands of a bona by one having an interest in or

a fide holder. Such is the rule of the right to control the propertyis common law as settled in numerous equivalent to a delivery of the prop; cases, and recognized since the celeerty itself.

Being symbolical brated case of Lickbarrow v. Mason, 2 of the property described therein, it Term R. 63, 6 East, 21. Dows v. may be transferred, like the property Greene, 24 N. Y. 638, 644. See Stollenitself, by delivery merely, and this is werck v. Thacher, 115 Mass. 224. so without regard to the presence or 10. Dows v. Greene, 24 N. Y. 638, absence of words of negotiability on 641. its face. It is unlike commercial paper 11. Barnard v. Campbell, 55 N. Y. in this - the assignee cannot acquire 456. a better title to the property thus sym- Cent. R. Co., 29 La. Ann. 446.

And see Hunt v. Mississippi bolically delivered, than his assignor

Bona had at the time of the assignment."

fide purchaser.- The pur

chase of a bill of lading of one See also Strauss v. Wessel, 30 Chio

who obtained it through fraud conSt. 211.

Mary Ann est, Fed. Cas. fers upon the purchaser no title to the 9,197; Newhall v. Central Pac. R. R. goods described, though he purchased Co., 51 Cal. 345; Midland Nat. Bank it in good faith and for a valuable v. Missouri, K. & T. Ry. Co., 62 Mo. consideration. Blossom v. Champion, 531; Chandler v. Belden, 18 Johns. 37 Barb. (N. Y.) 554. See also (N. Y.) 157, 9 Am. Dec. 193; Dows Bank v. Shaw, Fed. Cas. No. 843, v. Greene, 24 N. Y. 638; McCants v. afd. in 101 U. S. 557: Winslow Wells, 4 S. C. 381.

v. Morton, 29 Me. 419, 50 Am. Dec. The delivery of the bill of lading, 601. The purchaser of a bill of ladas between the vendee and third per. ing, who has reason to believe that sons, is a delivery of the goods them. his vendor was not the owner thereof,

blank, or payable to bearer, is not bound to look beyond the instrument, has no application to the case of a lost or stolen bill of

lading. 12

$ 18. Letters of credit.

a. Definition and nature.— Letters of credit are sometimes called bills of credit. They are to be classed as commercial paper, although they are not negotiable and lack many of the essential characteristics of bills and notes. 13 The definition of a letter of credit which is most commonly used is that given by Justice Story, as follows: A letter of credit (sometimes called a bill of credit) is an open letter of request, whereby one person (usually a merchant or a banker) requests some other person or persons to advance moneys, or give credit to a third person named therein, and promises that he will repay the same to the person advancing the same, or accept bills drawn upon himself for a like amount. 14 These letters have been introduced for the convenience of travelers and agents, to obviate the trouble and risk of carrying about coin or other money. In such cases, they are generally in the nature of circular notes issued by the banker; these notes are unsigned drafts, to be signed and used by the bearer of the letter of credit in his discretion. A deposit is made by the bearer of the letter with the banker as an indemnity, in which case the bearer may recover the balance to his credit upon the return of the letter and the unused circulating notes.

b. Classification.— Letters of credit are either special or general. They are special when they are addressed to a particular individual directing him to advance the sums specified therein to


or that it was held to secure an out- Law (2d ed.), p. 831, which standing draft, is not a bona fide pur- adopted in the case of Johanessen v. chaser, nor entitled to hold the mer- Munroe, 84 Hun, 594, 32 N. Y. Supp. chandise covered by the bill as against 1144. the true owner.

Shaw v. Merchants' A letter requesting one person to Nat. Bank, 101 U. S. 557, 25 L. Ed. make advances to a third person on the 892.

credit of the writer is a letter of 12. Shaw v. Merchants' Nat. Bank, credit. Mechanics' Bank v. N. Y. & 101 U. S. 557, 25 L. Ed. 892.

N. H. R. R. Co., 4 Duer (N. Y.), 480, 13. Edwards on Bills and Notes, 13 N. Y. 599; Brickhead v. Brown, 5

Hill (N. Y.), 634. 14. Story on Bills of Exchange, Byles defines a letter of credit as an $ 459. This definition is substantially authority, or rather request, by a the same as that used by Daniel in his banker to his foreign correspondent work on Negotiable Instruments (4th named therein, to discount bills drawn ed.), & 1790, and is the same as that on him by the bearer. Byles on Bills contained in 18 Am. & Eng. Encyc. of (16th ed.), p. 111,

p. 239.

the persons named; they are general when addressed to all persons requesting such advances to the persons named therein.15

c. Effect of letters of credit.- The effect of a letter of credit is to place the issuer under a contract binding probably at law, but certainly so in equity, to pay, even without acceptance, all bills drawn in conformity with the letter of credit; and the holders are not to be prejudiced by any set-off or cross-claim by the drawee against the drawer.16 They sometimes have the effect of guaranties, although a pure letter of credit is an absolute and independent promise which binds the drawer without regard to the failure of any other person. They are often promises to honor bills of

15. Characteristics of letter of been delivered. The special letter of credit.- Marius in his work on Bills, credit is, when a merchant, at the repp. 35, 36, written at the end of the quest of any other man, doth write his eighteenth century, describes letters of open letter of credit, directed to his credit in the following language: factor, agent or correspondent, giving “Now letters of credit, for the fur. him order to furnish such or such a nishing of moneys by exchange, are man, by name, with such or such a of two sorts, the one general, the sum of money, at one or more times, other special; the general letter of and charge it to the account of the credit is, when I write my open letter merchant that gives the letter of credit, directed to all merchants, and others, and takes bills of exchange or receipts that shall furnish moneys unto such for the same.” and such persons, upon this my letter

Form of letter of credit.- The folof credit, wherein and whereby I do lowing is a form of a special letter of bind myself, that what moneys shall credit, which was under consideration be by them delivered unto the party, in the case of Johanessen v. Munroe, or parties, therein mentioned, within 84 Hun (N. Y.), 594, 32 N. Y. Supp. such a time, at such and such rates 1144: (or in general terms at the price cur- No. 5,687. rent), I do hereby bind myself for to OFFICE OF JOHN MUNROE & Co., be accountable and answerable for the Bankers, 32 Nassau St., same, to be repaid according to the

NEW YORK, Feb. 26, 1892. bill or bills of exchange, which, upon Messrs. MUNROE & Co., Paris : the receipt of the money so furnished, GENTLEMEN.- We hereby open shall be given or delivered for the credit with you in favor of Captain

And if any money be furnished J. A. Johanessen, SS. “ Raylton upon such, my general letter of credit, Dixon,” for fifteen thousand francs and bills of exchange therefor given, (Fes.15,000), available in bills at and charged, drawn, or directed to me, ninety days' date; on acceptance of although, when the bills come to hand, any bill or bills drawn under this and are presented to me, I should re- credit you are to draw on Corsten Boe, fuse to accept thereof, yet (according New York, at seventy-five days' date, to the custom of merchants), I am payable at the current rate of exbound and liable to the payment of change for first-class bankers' bills on those bills of exchange, by virtue and Paris on day of maturity. Commisforce of such my general letter of sion is arranged. Bills under this credit; because he or they, which do credit to be drawn at any time prior furnish the money, have not so much to May 1, 1892. if any respect unto the sufficiency or

Truly yours, ability of the party, which doth take

JOHN MUNROE & Co. up the money, as unto me, who have 16. Byles

Bills (16th ed.), given my letter of credit for the same, p. 111. and upon whose credit, merely, those 17. Scribner v. Rutherford, 65 Iowa, moneys may be properly said to have 551, 22 N. W. 670.




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