were inserted to choose between conflicting decisions, or to correct some admittedly serious errors in the law, the whole purpose of the English Bills of Exchange Act was to reproduce, as exactly as possible, the existing law. This act has now been in force in Great Britain for twenty years, and has been adopted by all of her self-governing colonies. English merchants, bankers, and lawyers appear to unite in the opinion that it has been successful even beyond expectation. At the Annual Conference of the Commissioners on Uniform State Laws, held in Detroit in 1895, a resolution was passed requesting the Committee on Commercial Law to procure, as soon as practicable, a draft of a bill relating to commercial paper based upon the English Bills of Exchange Act and upon such sources of information as the Committee might deem proper to consult. The matter was referred to a sub-committee consisting of Judge Lyman D. Brewster, of Connecticut; Henry C. Willcox, of New York, and Frank Bergen, of New Jersey, who secured Mr. John J. Crawford, of the New York bar, a well-known expert on the law of bills and notes, to draft the proposed bill. The English act had followed the continental codes as to form, i. e. it dealt primarily with bills of exchange, and then applied those provisions, so far as they were applicable, to promissory notes, adding provisions which were peculiar to the latter class of instruments. Deeming this form to be unsuited to American conditions - the use of bills of exchange being proportionately less extensive here than in Europe - Mr. Crawford adopted a form of his own, which grouped together the provisions applicable to all kinds of negotiable instruments, and then collected, under separate articles, the provisions specially affecting the different classes. Mr. Crawford's draft was laid before the sub-committee, each. section being annotated with reference to the decisions of the Courts, the comments of text-book writers, and the statute laws of the several states. This draft (slightly amended by the subcommittee) and the draftsman's notes were printed along with the English bill for comparison, and copies were sent to each member of the Conference, to many prominent lawyers and law professors, and to several English judges and lawyers, with an invitation for suggestions and criticisms. The draft was then submitted to the Conference at Saratoga in 1896. The twenty-seven Commissioners who were in attendance representing fourteen different states went over it section by section, and made some amend ments to it, most of which," says Mr. Crawford, were such changes in the existing law as I had not felt at liberty to incorporate into the original draft." The draft as thus amended was adopted by the Conference, and in such form has been submitted to the various state Legislatures. The most important contribution that has been made to the act is the Ames-Brewster controversy. In the Fourteenth Harvard Law Review, Professor James Barr Ames, Dean of the Harvard Law Faculty, for some years lecturer on Bills and Notes in the Harvard Law School, and the author of the leading case book on the subject, published an article criticising some twenty-three sections of the new act, and expressing the opinion that notwithstanding the act's many merits, "its adoption by fifteen states must be regarded as a misfortune, and its enactment in additional states, without considerable amendment, should be an impossibility." Professor Ames' criticisms were answered by Judge Lyman D. Brewster, President of the National Conference on Uniform State Laws, and a member of the sub-committee which drafted the act. The discussion consists of two articles in the Harvard Law Review, by Professor Ames,2 and two articles by Judge Brewster, one published in the Yale Law Journal and one in the Harvard Law Review. In a pamphlet recently published by the Harvard Law Review Publishing Association, containing the text of the act, together with these articles, there are added a supplementary note by Professor Ames criticising two additional sections of the act a reply thereto by Judge Brewster, and a letter containing comments on some points of the discussion by Mr. Arthur Cohen, Q. C., a member of the committee which framed the English act, who was recommended by Judge Chalmers as one of the three best authorities in England on the law of bills and notes. As Judge Brewster remarks, "No keener weapon than that wielded by the accomplished Dean of the Harvard Law School could be turned against the Negotiable Instruments Law." Professor Ames knows more about the law of bills and notes from the student's standpoint than any one else in this country. Whatever one's conclusions may be as to the soundness of his criticisms, there is little doubt that few, if any, of the vulnerable points in the act have escaped his notice, and that the sections he criticises are 1 Crawford's An. N. I. L. Preface. 2 14 Harvard Law Review 241; 14 Harvard Law Review 442. those most likely to come up for construction. A familiarity with his criticisms and with Judge Brewster's replies cannot but aid both the bench and bar in giving some sections of the act their proper meaning. This consideration, together with the difficulty of understanding the discussion in its present form, where the criticism of each section, the answer, replication, and rejoinder are spread out through four separate articles, has prompted me to write a review of the controversy. Two general observations may be made, which should be borne in mind throughout the entire discussion. In the first place, no one can judge the new act fairly who does not realize that the Commissioners were attempting to codify the law. Their aim was not to reform the law of negotiable paper. It was to state accurately and concisely the existing law. Of course, here and there it was necessary to choose between two or more conflicting views. Very frequently a section changes the law in a small minority of states which had departed from the almost uniform current of authority. Occasionally, though very rarely and only when there seemed to be no room for a difference of opinion, the law was deliberately changed. But the main, and almost the sole purpose of the framers of the Negotiable Instruments Law was to reproduce, as exactly as possible, that which the great weight of authority had declared to be the law. Second, in construing some sections of the act, the language used must be given not a hyper-literal meaning, but a reasonable legal meaning, derived, to some extent, from a knowledge of the cases on which the sections are based. It would be a great achievement for a code to state the law, in every instance, in language capable of meaning only one thing, even to a man entirely without legal training and unacquainted with what the law was before the code. But it will be a long time before such a code is framed. Of course, in the great majority of instances the Negotiable Instruments Law does this. But it is not a serious reflection on the act 1 The discussion between Professor Ames and Judge Brewster makes no attempt to take up the broad question as to the propriety and utility of codification. For a most learned and able argument against codification, the reader may be referred to a book by R. F. Clarke, Esq., of the New York bar, entitled "The Science of Law, and Law Making." The arguments in favor of at least a partial codification of such a branch of the law as that relating to commercial paper are concisely stated by Judge Brewster in a paper read before the American Bar Association in 1898 on "Uniform State Laws," which is reprinted in the report of the Ninth Conference of the Commissioners for Promoting Uniformity of Legislation in the United States. that in some instances a familiarity with the cases on which the language of the act is based, is if not necessary at least very helpful in deciding what the language means. Indeed, Judge Brewster said to the American Bar Association, in discussing the new act in 1898, " Care has been taken to preserve, as far as possible, the use of words which have had repeated construction by the courts, and have become recognized terms in the law merchant." With these observations we may proceed to consider the discussion of particular sections. Section 3, par. 2: "An unqualified order or promise to pay is unconditional within the meaning of this act though coupled with a statement of the transaction which gives rise to the instrument.” "What," asks Professor Ames, "do these words mean? Do they cover the case of a note coupled with the words 'given as collateral security for A.'s debt to the payee'? Such an interpretation, although a literal one, would be deplorable and would nullify several decisions." 1 It would, indeed, be deplorable, for such notes are clearly conditional and courts have uniformly refused to regard them as negotiable. Judge Brewster's answer is that this clause does not apply to the case put since "a note 'given as collateral security' contains notice, upon its face, that the note is not an unconditional promise to pay, but conditional upon the non-payment of the principal debt." And he refers to Section 1, par. 2, which requires a negotiable instrument to contain "an unconditional promise or order to pay a sum certain in money." There is no danger that any court will ever make the innovation that would result from the "deplorable interpretation," indicated by Professor Ames. Nor could such a conclusion easily be reached from the language of the act. Without turning back to the first section, the very clause under discussion speaks only of "an unqualified order or promise." If "the statement of the transaction" contains a qualification of the order or promise, if it shows that the instrument is not payable at all events, but only on a contingency, the instrument can scarcely be said to contain "an unqualified order or promise." A fair and 1 Robbins v. May, 11 A. & E. 213; Haskell v. Lambert, 16 Gray 592; Costelo v. Crowell, 127 Mass. 293; 134 Mass. 280, 285; American Bank v. Sprague, 14 R. I. 410; Hall v. Merrick, 40 Up. Can. Q. B. 566. 66 reasonable reading of the section would scarcely require even the most literal interpreter to hold that this clause covers a note given as collateral. To do so, he would have to construe it as meaning, a note is unconditional provided you start it with an unqualified promise, no matter how many qualifications and conditions are later embodied in the statement of the transaction which gave rise to the instrument." Such an interpretation would be far-fetched, not literal. But Professor Ames makes another criticism of this clause of Section 3, which is less easily disposed of. The real purpose of who drafted the act, 3 this clause, as we learn from Mr. Crawford, and from Judge Brewster, is to cover the case of a note which contains a statement that it is given for a chattel, which is to be the property of the owner of the note until the note is paid. Such notes are usually regarded as negotiable. Several states, however, have taken the opposite view, holding that such notes are non-negotiable, and it was to bring the latter states into accord with the more general view and unify the law on this point, that this clause was inserted. But will it accomplish this object? That is Professor Ames' further criticism. The only case touching the point is of little or no assistance, but it may seriously be doubted whether this clause will overrule the decisions at which it was aimed. It does not cover a note "given as collateral security " because such a note contains notice, upon its face, that the note is not an unconditional promise to pay." Suppose a judge decides that a chattel note (one containing a statement that it is given for a chattel which 66 1 Crawford. An. N. I. L. 12. 2 Chicago Co. v. Merch. Bank, 136 U. S. 268; Howard v. Simpkins, 69 Ga. 773; Choate v. Stevens, 116 Mich. 28; Heard v. Dubuque Bank, 8 Neb. 10; Mott v. Havana Bank, 22 Hun 354; National Bank of Royersford v. Davis, 6 Montg. Co. (Pa.) 99; Kimball v. Mellon, 80 Wis. 133. 8 Sloan v. McCarthy, 134 Mass. 245; South Bend Co. v. Paddock, 37 Kan. 510; Third Nat. Bank v. Armstrong, 25 Minn. 530; Deering v. Thorn, 29 Minn. 120. 4 Third Bank v. Spring, 28 N. Y. Misc. Rep. 9. White, J., held that a note, containing a statement that it is given for a piano, the title of which shall remain in the payee until the note is paid, is not a negotiable instrument. After so holding, he simply remarks that Section 3, par. 2, of the Negotiable Instruments Law "has no application here." This decision was reversed in 50 N. Y. App. Div. 66, the court making no allusion to the statute, but merely holding with the current of authority that such a note is negotiable. Judge Brewster points out that the note in this case was made in 1896 and negotiated in May, 1897, but that the New York Negotiable Instruments Law did not become operative until October, 1897, and, therefore, as Judge White said, had no application to the case. Whether Judge White meant that the act did not apply because it was not yet operative, or because the note under discussion was not covered by the section referred to, does not appear. |