Text of Statute of Anne

At this juncture, in confirmation of the ancient rule, and to meet the rule established by Lord Holt, the statute of Anne was enacted. It is so important, and so often referred to hereafter, that space is given to it. Its most important provisions are as follows: "Whereas, it hath been held that notes in writing, signed by the party who makes the same, whereby such party promises to pay unto any other person, or his order, any sum therein mentioned, are not assignable or indorsable over, within the custom of merchants, to any other person; and that the person to whom the sum of money mentioned in such note is payable cannot maintain an action by the custom of merchants, against the person who first made and signed the same; and that any person to whom such note shall be assigned, indorsed, or made payable could not, within the said custom of merchants, maintain any action upon such note against the person who first drew and signed the same: Therefore, to the intent to encourage trade and commerce, which will be much advanced if such notes shall have the same effect as inland bills of exchange, and shall be negotiated in like manner, be it enacted, that all notes in writing whereby any person shall promise to pay to any other person, his order or unto bearer any sum of money mentioned in the note shall be taken and construed to be payable to any such person to whom the same shall be payable; and also every such note shall be assignable or indorsable over in the same manner as inland bills of exchange are according to the custom of merchants; and that the person to whom such sum of money is payable may maintain an action for the same as he might do upon an inland bill of exchange made, or drawn, according to the custom of merchants; and that any person to whom such note is indorsed, or assigned, or the money therein mentioned ordered to be paid by indorsement thereon, may maintain his action for such sum of money either against the person who signed the note, or against any of the persons that indorsed the same, in like manner as in cases of inland bills of exchange." Thus by the statute of Anne the negotiability of notes was established. Its prin

ciples have been followed and generally embodied in the statutes of the various states of the Union. And in the many cases which arise with reference to the negotiability of instruments in forms of notes, the point is to determine whether they were such as were within the purview of the statute of Anne, or of the statutes of the various states which have embodied the principles of the statute of Anne. Construction of Statute of Anne-Non-Negotiable Notes

The statute of Anne, at the hands of the courts, has been construed with great latitude, a latitude in fact which renders somewhat inconsistent and irreconcilable the theories of negotiable and non-negotiable instruments. The English courts after its enactment looked upon it as a remedial statute, as it undoubtedly was. But by a line of cases which seem to go beyond the utmost limits of its evident intendment, the courts also declared that non-negotiable notes came within the statute's provisions.14 A payee, they decided, could maintain an action within the statute against the maker, by which was meant only that the payee could declare upon the note, under the statute, instead of declaring upon the consideration or transaction which led to its being given. This interpretation, which in its inception was possibly an adaptation of an artificial system of pleading to business needs, has resulted in confusion. In New York,15 for instance, it seems to be the view of the courts that non-negotiable notes differ from negotiable ones only in two main particulars. One is that the indorser is regarded as a maker or guarantor, and not as a simple indorser; the other that the equities between the parties are not a subject of set-off when the instrument is transferred to a bona fide purchaser for value before maturity. Therefore in New York the general rule of contracts, that there cannot be a recovery upon them without proof of consideration, does not obtain with non-negotiable instruments, and

14 Kyd, Exch. (1790) 65; SMITH v. KENDALL, 6 Term R. 123, 1 Esp. N. P. 231, Moore Cases Bills and Notes, 4; Burchell v. Slocock, 2 Ld. Raym. 1545; Miller v. Biddle, 13 Law T. (N. S.) 334.

15 Maule v. Crawford, 14 Hun (N. Y.) 193; Lee v. Swift, 1 Denio (N. Y.) 565; Barrick v. Austin, 21 Barb. (N. Y.) 241.

the non-negotiable promise to pay money is itself presumption of a consideration.16 So, too, in Massachusetts, where,

16 President, etc., of Goshen & M. Turnpike Road v. Hurtin, 9 Johns. 217, 6 Am. Dec. 273; Kimball v. Huntington, 10 Wend. (N. Y.) 675, 25 Am. Dec. 590; Paine v. Noelke, 53 How. Prac. (N. Y.) 273; 3 Kent, Comm. 77; Carnwright v. Gray, 127 N. Y. 92, 27 N. E. 835, 12 L. R. A. 845, 24 Am. St. Rep. 424. The New York statute, which was a substantial re-enactment of the statute of Anne, has been replaced by N. I. L. § 320, by which the law in this respect, it seems, has been changed. Deyo v. Thompson, 53 App. Div. 9, 65 N. Y. Supp. 459 (N. I. L.); Kinsella v. Lockwood, 79 Misc. Rep. 619, 140 N. Y. Supp. 513 (N. I. L.); Richards v. Levison (Sup.) 142 N. Y. Supp. 273 (N. I. L.). These cases, therefore, decide that a non-negotiable note is not a mercantile specialty and that to recover upon it a consideration must be alleged and proved. As stated in the text, there is much American authority for the view that a non-negotiable bill of exchange is within the custom of merchants permitting a recovery without alleging and proving a consideration for the acceptor's promise. Kendall v. Galvin, 15 Me. 131, 32 Am. Dec. 141; Coursin v. Ledlie's Adm'r, 31 Pa. 506; Louisville E. & St. L. Ry. Co. v. Caldwell, 98 Ind. 245; Windsor Cement Co. v. Thompson, 86 Conn. 511, 86 Atl. 1. And in Mehlberg v. Tisher, 24 Wis. 607, it was held that the obligation of the drawer of a non-negotiable bill was conditional upon due presentment and notice of dishonor. That a non-negotiable bill is a mercantile specialty has also been given as the reason why a parol acceptance of such a bill is not within the Statute of Frauds. JARVIS v. WILSON, 46 Conn. 90, 33 Am. Rep. 18, Moore Cases Bills and Notes, 5; Arnold v. Sprague, 34 Vt. 402. There is no direct support for this conclusion to be found in the English decisions, but there is some evidence that this conclusion is correct. In Chitty on Bills (13th Am. Ed.) 159, it is stated: "As the commercial advantage to be gained from the negotiable quality of bills of exchange was the only reason why our courts allowed in their favor an exception to the rule relative to choses in action, it was once thought that unless they possessed that quality that they would have no greater effect than that of being mere evidences of a contract, and this is still the law in France. * * * But it is now well established in Great Britain that it is not essential to the validity of a bill as an instrument that it be transferable from one person to another." Bills of exchange could be very useful without being negotiable. Probably their first use was for the payment of debts due to foreign parties. Malynes, Lex Mercatoria (Ed. of 1636) p. 252, says: "And even as money was invented * * to avoid the troublesome carriage of commodities up and down and from one country to another, so (upon like considerations) when other nations (imitating the Romans) did coin monies, exchange by bills for monies was devised to avoid both the danger and adventure of monies and the troublesome carriage there

although the statute of Anne has never been enacted, its doctrines are regarded as declaratory of the common law,17

17

of." See, also, Jenks, Early History of Negotiable Instruments, 9 L. Q. R. 70-85, 3 Anglo-Am. Leg. Essays, 51-71. For this reason it is not surprising to find that Malynes gives as a usual form for a bill of exchange, a form not containing words of negotiability. Malynes, Lex Mercatoria (Ed. of 1636) 261, 262. Malynes was a merchant, and very likely was not well informed as to the history of and reasons for the rules stated in his book. Burdick, Contributions of the Law Merchant to the Common Law, 2 Col. L. R. 470-485, 3 Anglo-Am. Leg. Essays, 34-50. Beawes, Lex Mercatoria (6th Ed.) 563, in giving directions for the drawing up of bills, says: "The remitter must specially observe that the name of the person to whom payment is to be made, be well and truly spelled, or, if it be made to his order, that those words be clearly written." Marius, Advice Concerning Bills (Dublin, 1794) 34, says: "But if the bill be made payable positively to such a man, or his assigns, or order, then an assignment of the bill will not serve the turn, but the money in the strictness of the letter must be immediately paid to such a man in person and he must be known to be the same man mentioned in the bill of exchange, that so the money may not be paid to a wrong party, and so the acceptor forced to pay it twice." On pages 7-9 ten examples of bills are printed. Each is dated in 1654. Five are payable "to order," four "to assigns," and one contains no words of negotiability. The decisions in Dawkes v. De Lorane, 3 Wilson, 207, Banbury v. Lisset, Strange, 1211, and Ewers v. Benchkin, 1 Lutw. 82, are not contrary to the conclusion that a non-negotiable bill was a mercantile specialty. Professor Ames considered that the decisions that an action at law could be maintained on a lost non-negotiable bill showed that a nonnegotiable bill was not a mercantile specialty. 2 Ames Cas. B. & N. 63, note 4, and cases cited. But perhaps these decisions may be regarded as the enforcement of an equitable cause of action in the common-law courts. As to promissory notes the evidence that a nonnegotiable instrument is a mercantile specialty is even more meager. In Lewis v. Orde, 2 Sittings in Middlesex, 8 Geo. II, reported in Cunningham on Bills (3d Ed., 1766, and 6th Ed., 1778) 133, it was held that such a note was a mercantile specialty under the statute of Anne. As pointed out in the text, unless this were true independently of the act, this decision and the American decisions in accordance with it seem erroneous. Williams v. Williams, Carth. 269 (1692), contrary to the first impression one receives from it, does not decide that such a note was a mercantile specialty prior to the statute of Anne. In that case an action on the custom of merchants was held to lie against the indorser of a non-negotiable note. But it does not appear that the indorsement was not a full one, containing words of

17 Richards v. Barlow, 140 Mass. 218, 6 N. E. 68.

the early English rule is followed.18 The courts of Connecticut, however, have adopted a different rule.19 With negotiability and thus in itself a negotiable bill of exchange. See Bay v. Freazer, 1 Bay (S. C.) 66. There seems, therefore, to be no direct support from English authorities for the following statement, made by the court in Seymour v. Van Slyck, 8 Wend. (N. Y.) 403: "It is not essential to the validity of a bill of exchange or promissory note under the statute, or according to the custom of merchants, that it should be negotiable." But the statement seems reasonable because of the early mercantile usefulness of mercantile specialties and the comparatively late realization of negotiability. The truth will be ascertained only by further historical inquiries into the beginnings of negotiability. In 2 Pollock & Maitland, History of English Law, 225, it is said: "In the twelfth century * ** documents of a purely obligatory character were still rare. They seem to have come hither with the Italian bankers. They generally took the form of the single bond; the bond with a clause of defeasance seems to be of later date.

* Often the debtor is bound to pay the money either to the creditor, or any attorney or mandatory of his, who shall produce the bond." Thus not only the idea of enforcement of payment by another than the immediate promisee, but the idea of an obligation embodied in an instrument and existing independently of the transaction out of which it arose, came from the foreign merchants. It is certainly plausible to say that this conception of an obligation as a thing the formal obligation or specialty-must have preceded the conception of negotiability, when we read the reasons given by the closest students of early law for the inalienability of choses in action among primitive people. Professor Jenks points out that the primitive mind does not think of a transfer of anything except by a delivery. 9 L. Q. R. 70. See 2 Pollock & Maitland, Hist. of Eng. Law, 226. But paper and writing having been conceived of as a thing -an obligation-the market overt of the merchants' fairs furnished the basis for the negotiability of mercantile specialties. See Introduction to Smith's Mercantile Law (11th Ed.) note, p. lxxi. Professor Jenks gives several instances of early mercantile obligations which apparently were non-negotiable. Early Hist. of Neg. Insts., 9 L. Q. R. 70. He says (page 71): "A Piacinza Ordinance of the year 1391 compels Campsores to give written acknowledgments of moneys deposited with them, and provides for a special and speedy remedy on such documents. Unfortunately, nothing is said about transferabil

18 Townsend v. Derby, 3 Metc. (Mass.) 363; Dean v. Carruth, 108 Mass. 242. But in Massachusetts, in case of disputed consideration, the burden of proof is on the plaintiff. Perley v. Perley, 144 Mass. 104, 10 N. E. 726; Simpson v. Davis, 119 Mass. 269, 20 Am. Rep. 324. 19 Edgerton v. Edgerton, 8 Conn. 6; Bristol v. Warner, 19 Conn. 7; Daniel, Neg. Inst. § 162; Pars. Bills & N. 227.