This convenience was threefold: it enabled a creditor to receive payment of his debt without trouble, risk, or expense; the debtor could pay his debt, if he was so disposed, without difficulty, and the pers on who presented the bill could find in a foreign or distant pla ce money for his immediate needs without the danger or inconvenience of having the specie in his possession. The customs of merchants in respect to these bills made effectual as rules of law certain regulations controlling their use. The whole system of the law of commercial paper is the direct outgrowth of these customs. Statutes have been enacted and legal principles have been judicially declared, all of which have had their birth in these mercantile customs and usages.' 14 c. Records and chronicles showing use of bills of exchange.For some considerable time before we meet with bills of exchange in the reports and on the statute-books, they were used by English merchants for the purposes of foreign trade; they were treated by custom as binding long before they obtained the force of law through the recognition of courts of justice. As to just when and by whom these negotiable instruments were first used it is difficult to say. Their origin is imbedded in obscurity. It seems safe to assert that they were not an invention but a development. A careful and exhaustive investigation of mediæval records and chronicles does not disclose the semblance of a bill of exchange in its modern form earlier than the middle of the thirteenth century. The work of Pegoletti of Florence (Practica della Mercatura), attributed to the commencement of the fourteenth century, contains unmistakable references to scritti de cambiio (letters of exchange), and makes use of several of the technical terms so familiar at the present day. But Salvetti, who secret letters on those to whom they had intrusted their effects in the former countries, who honorably discharged the trust reposed in them, by complying with the orders contained in the letters. In the course of time these letters received a fixed form, and had conferred on them the name of bills of exchange. Kyd on Bills of Exchange, p. 1. considered as the outcasts of mankind, in an unenlightened age, urged by the necessity of their situation, to introduce into Europe at least, if not to give birth to, a method, by which merchants, of regions the most remote from each other, could convey the reasons of procuring the value of their commodities, without the inconvenience of transporting gold or silver. About the middle, or toward the end 14. It is to the custom of merchants of the thirteenth century, the Jews, that we owe the law as to bills of exdriven by the exactions of the Prince, change, promissory notes, and other from England and France, took refuge negotiable instruments. "Custom in in Lombardy, and from thence gave to the Common Law," by F. A. Greer, L. merchant strangers and travelers Quar. Rev. vol. 9, p. 165. writes of the antiquities of Florence,15 mentions a corpus artis cambii sanctionem of the year 1259, which dealt largely with the art of weighing and testing coin, but did not recognize or contain a reference to the existence of litteræ cambii. Mr. Jencks in his article entitled "Early History of Negotiable Instruments," 16 gives in full a letter of exchange, bearing date October 5, 1339, and states that it is the oldest bill of exchange known to him. Another example is also given, dated May 18, 1404. Both of these letters are clearly distinguishable as intended for use as bills of exchange, in the same sense and for the same purpose as such bills are used at the present time. d. Statutes and ordinances relating to bills of exchange.- Early European statutes and ordinances have given still further proof of the existence of bills of exchange at a date not later than the end of the fourteenth century. Mr. Jencks also cites a Piacenza ordinance of the year 1391, which compelled campsores or dealers in money to give written acknowledgments of money deposited with them, and provides for a special and speedy remedy on such documents; and by an almost contemporary ordinance, adopted by the magistrates of Barcelona, March 18, 1394, it is provided that any one, to whom a letter of exchange is presented, must answer within twenty-four hours, whether he will accept or not, and must further indorse on the letter the decision to which he comes together with the exact date of the presentation. If he fails to comply with this rule, he is to be deemed to have accepted.17 And again, an ordinance of the French King, Louis XI, 18 creating or renewing a quarterly fair in the town of Lyons, refers to the use of lectres de change as an established institution for merchants whose business compels them to frequent fairs. e. Judicial decisions involving bills of exchange.- Not many very early cases seem to have been cited in which the courts of European countries or of England have recognized the custom of merchants in respect to bills of exchange. Mr. Jencks, in the article above referred to, has called attention to a case which he selected from a number published by Brunner in the Zeitschrift für Handelsrecht, which were discovered among manuscript copies 15. Salvetti, Antiquates Florentina, einer historischen Entwickelung, etc., p. 107. 1777. 16. 9 Law Quar. Rev., p. 73. 17. This ordinance is printed in full in the Appendix of Marten's Cersuch 18. Recueil General des anciennes Lois français, by Isambert, Jourdan, and De Crusy (Ed. 1825), X, 451-456. The ordinance is dated 1462. of Protocols recorded in connection with proceedings before the town council of Bruges, in the middle of the fifteenth century. The case referred to is Spinula v. Camby, in which judgment was rendered March 29, 1448. It involved a bill of exchange given by Ricy at Avignon to Cerruche, and drawn on one Marian Rau, payable at Bruges to Camby, the defendant, and one other. Rau paid the bill to Camby, but Camby nevertheless protested for nonpayment, and sent the bill back with the protest to Avignon. Marian Rau's rights passed to her brother Odo, who assigned them to Spinula, the plaintiff, who sued Camby for the amount received by him from Marian Rau. The defendant pleaded the bankruptcy of Odo Rau, and also that Spinula was not a proper party to sue, but that the suit should have been commenced by Marian Rau. The court held that the transfer was worthless and nonsuited the plaintiff. We have here a case remarkably similar in all its aspects to one which might arise under the modern law. Enough more cases from the same source, and contemporaneous, could be described, as to leave no doubt but that early in the fifteenth century bills of exchange were common subjects of litigation in Belgium. The first reported case in England of a suit on a bill of exchange seems to be that of Martin v. Bowie, 19 decided in the first year of the reign of James I. No new legal principle was involved in this case. The bill was stated in the declaration to have been drawn secundem usum mercatorum, but there does not seem to have been any evidence of what the usus mercatorum was, as indeed was not necessary, as the action was in assumpsit between parties between whom there was privity of contract, and the obligation was complete without proof of any custom. Another and apparently the next English case reported is that of Oaste v. Taylor.20 The principle was declared in this case that the acceptance of a bill of exchange amounts, by the law merchant, to a promise to pay; but that it must be stated that the drawee was a merchant at the time he accepted it." The custom invoked in this 19. Croke's Reports, vol. 2, p. 6 (1 Jac. I). 20. Croke's Reports, vol. 2, p. 306 (10 Jac. 1). direct his bill of exchange, bona fide, and without covin, to another merchant commorant beyond seas, and trafficking between London and the 21. The case is stated thus in the parts beyond seas; upon such a merreports: "Whereas by the custom of chant's accepting a bill, and subscribLondon between merchants trafficking ing it according to the use of merchant, from London into the parts beyond it hath the force of a promise, to seas, if any merchant commorant in compel him to pay at the day apLondon, and trafficking beyond seas, pointed by the bill." case was local to the city of London, and was only applicable to foreign bills. It would seem that at this time the use of bills of exchange had been confined to foreign trades. At a somewhat later date legal recognition was extended to inland bills between traders, and finally to all bills, whether drawn and accepted by traders for purposes of trade, or by private persons for purposes unconnected with trade.22 This extended recognition of bills of exchange was only brought about slowly, by those tentative hesitating steps that are so characteristic of English law reform, whether legislative or judicial. It would seem that at first the validity of inland bills of exchange depended solely on the local custom. In the earlier cases it was required to produce some evidence of the custom, but later, when the custom became general rather than local, the courts took judicial notice of it, as they did of all other parts of the common law.23 § 5. Assignability of bills of exchange. It is a very ancient rule of common law that a chose in action (which is defined to be a right not reduced into possession) could not be assigned or transferred. This rule seems to have been the result of the fear that such transfers would produce oppression of the weak by the strong, and cause endless litigation." How 22. Bromwich v. Lloyd, 1 Lutw. (Eng.) 503 (8 Wm. III). It is stated in this case by Chief Justice Treby that bills of exchange at first were extended only to merchant strangers trading with English merchants, and afterward to inland bills between merchants trading one with another in England, and after that to all traders and dealers, and of late to all persons trading or not. 23. Carter v. Downich, 1 Show. (Eng.) 124, 3 Mod. 227 (3 & 4 James II). It was held in this case that it was sufficient to allege by plea that a bill had been indorsed according to the customs of merchants without setting out the custom, because the customs of merchants were part of the common law, and the courts would take judicial notice of them. In the case of Buller v. Crips, 6 Mod. (Eng.) 29 (2 Comm.), Chief Justice Holt says: "I remember when actions upon inland bills of exchange did first begin; and there they laid a par ticular custom between London and In the case of Brandao v. Barnett, 3 usage has been judicially ascertained on 24. This doctrine was based 66 the ground that such alienations ever commendable and necessary this rule seemed to be, it became apparent at an early date that the exigencies of commerce demanded that bills of exchange be excepted. Mercantile experience soon proved that the assignment of debts was, under certain circumstances, indispensable, and bills of exchange were devised as the most convenient instrument for facilitating, securing, and authenticating the transfer.25 And while the rigidity of the common-law rule has been relaxed by statute, both in England26 and in the States of this country, to the extent of making debts and other legal choses in action assignable in writing, yet bills and notes retain their superior convenience in being assignable by simple delivery, or by indorsement and delivery, according to the nature of the instrument.2 27 The negotiability of bills of exchange and the rules relating thereto will be hereafter considered.2 28 6. Inland and foreign bills of exchange. a. Definitions.- The Negotiable Instruments Law in force in many of the American States29 has adopted the definition of an inland bill of exchange and applied it to the State adopting such law. By such definition an inland bill of exchange is a bill which is, or on its face purports to be, both drawn and payable within tended to increase maintenance and litigation, and afforded means to powerful men to purchase rights of action, and thereby enable them to oppress indigent debtors, whose original creditors would not perhaps have sued them." Chitty on Bills, p. 6. And Lord Coke says that it is one of the maxims of the common law, that no right of action can be transferred, "because, under colour thereof, pretended titles might be granted to great men, whereby right might be trodden down and the weak oppressed, which the common law forbiddeth." Coke Litt. 27. Byles on Bills (16th ed.), p. 3. The derivative title (of a person to whom a bill has been indorsed or delivered) is a title by assignment, a title which the common law does not acknowledge, but which exists only by the customs of merchants. As it is by force of the custom of merchants that a bill of exchange is assignable at all, of necessity the custom must direct how it shall be assigned; and in respect to bills payable to order, the custom has directed that the assignment should be made by a writing on the bill called an indorsement, appointing the contents of that bill to be paid 25. On this ground, the custom of to some third person; and in respect merchants, whereby a foreign bill of of bills drawn payable to bearer only, exchange is assignable by the payee that the assignment should be conto a third person, so as to vest in him stituted by delivery only. This is simthe legal as well as equitable interest ple and obvious; every man who can therein, was recognized and supported read can discover whether the holder by our courts of justice in the four- of a bill claims to be the assignee of teenth century; and the custom of mer- it as assignee or bearer. Lord Chief chants rendering an inland bill trans- Baron Eyre in Gibson v. Minet, 1 H. ferable was established in the seven- Bl. 605. teenth century. Chitty on Bills, p. 8. 26. 36 & 37 Vict., chap. 66, § 25. 214a. 28. Post, chap. III. |