inally it distinguished the contracts of foreign merchants from the contracts of ordinary individuals, construing them hands of the sovereign, who could grant the right to the lords of the manors or to the merchants directly. The right to hold fairs was granted in this way, the necessity for the grant arising from the laws against the admission of foreign merchants. It was to the sovereign's interest to encourage trade and commerce, but at the same time to keep it confined to a few centers of trade. The former was a ready source of additional royal revenue; the latter made it much easier to collect such revenue and made the introduction of foreign trading more gradual. The least expensive inducement that the king could offer to the merchants was the privilege of having their causes tried in their own courts. See Coke, 4 Inst. 272; 3 Blackstone's Com. 33; 27 Edw. III, St. 2 (1353) ch. 2; Malynes' Lex Mercatoria, Part III, ch. xvi, p. 300. The latter purpose was shown in the chartering by the crown of certain towns as "Staple Towns," with a right to hold a court to determine mercantile disputes. The origin and jurisdiction of these courts of the fairs and "of the staple" have been the subjects of several able essays. Brodhurst, The Merchants of the Staple, L. Q. R. xvii, 56, 76; 3 Anglo-Am. Leg. Essays, 16-33; Chas. Gross, Introduction to Select Cases Concerning the Law Merchant, Publications of Seldon Society, vol. 23, p. xvi; A. T. Carter, Early History of the Law Merchant in England, 17 L. Q. R. 122; Scrutton, The Elements of Mercantile Law; Burdick, Contributions of the Law Merchant to the Common Law, 2 Col. L. R. 470–485. But the rapid increase in the number of English merchants, the decline of the guild merchant, and the constantly increasing strength of the crown, and, therefore, of the common-law courts, gradually resulted in the decision of mercantile, as well as other, causes by the commonlaw courts. The eagerness of the common-law courts, headed by Lord Coke, to cut off the jurisdiction of the admiralty courts in any except strictly maritime causes, hastened the assumption, by the common-law courts, of jurisdiction in these commercial cases. Holdsworth, 3 Anglo-Am. Leg. Essays, 308-21, 319. But this assumption of jurisdiction by the common-law courts did not immediately make the customs of the merchants applicable as rules of conduct to all persons. Says Scrutton, Elements of Mercantile Law, III: "You had to show yourself to be a merchant before you got into the mercantile court; and, until about two hundred years ago it was still necessary to show yourself to be a merchant in the common-law courts before you could get the benefit of the law merchant." Moreover, for a long time mercantile causes were decided in the common-law courts, by special juries of merchants. "It was the habit to leave the custom and the facts to the jury without any directions in point of law, with the result that the cases were rarely reported as laying down any particular rule, because it was almost impossible to separate the

not according to the principles of the common law, but according to the usages of trade. This custom of regulating custom from the facts." Scrutton, Elements of the Law Merchant, IV. The customs of merchants, in accordance with which the cases were decided, were not reduced to a definite body of written rules recognized and enforced by the courts. "A great step was gained when, in Lord Mansfield's time, the practice was commenced of leaving merely the facts to the jury while the judge applied the law to their findings." Aske, Customs and Usages of Trade, 20, 21. When special juries had repeatedly found that a certain custom or practice existed, the court could take judicial notice of such custom or practice. It has been said that when such a custom becomes thus established evidence will not be received to show any custom at variance with it. Aske, Customs and Usages of Trade, 30; Edie v. East India Co., 2 Burr. 1216. There is also authority for the view that, when the administration of the law merchant was taken over by the Court of Chancery and the common-law courts, the customs of the merchants became a part of the common law; that from that time on the law merchant, just as any other part of the common law, could not be directly modified by new practices, however universal. Crouch v. Credit Foncier, L. R. 8 Q. B. 374; Bosanquet, The Law Merchant and Transferable Debentures, 15 L. Q. R. 130; Jackson v. York & C. Ry. Co., 48 Me. 147; Evertson v. National Bank of Newport, 66 N. Y. 14, 23 Am. Rep. 9, semble; First Nat. Bank of Wymore v. Miller, 37 Neb. 500, 55 N. W. 1064, 40 Am. St. Rep. 499; Gregg v. Beane, 69 Vt. 22, 37 Atl. 248; Edmisten v. Henry Herpolsheimer Co., 66 Neb. 94, 92 N. W. 138, 59 L. R. A. 934. But the better view seems to be (and it is now supported by the weight of authority) that mercantile customs are still a distinct source of law, provable by the testimony of merchants, enforced by the same courts which administer the common and statute law. As the customs of merchants change the law merchant changes, except so far as it has been fixed by statute, for example, by the Negotiable Instruments Law. Goodwin v. Roberts, L. R. 10 Ex. 346, 352, affirmed 1 App. Cas. 476 (by some of the justices on a different ground); Rumball v. Metropolitan Bank, 2 Q. B. D. 194; Bechuanaland Co. v. London Trading Bank, [1898] 2 Q. B. 658; Edelstein v. Schuler, [1902] 2 K. B. 144. In the case last cited it was held that debentures according to which payment was subject to several conditions were made negotiable by recent custom among the dealers in such securities. This view is the only explanation for the negotiability of sealed bonds payable to order or bearer. Ordinary sealed notes have, in the absence of statute (see N. I. L. § 6 [subd. 4]) been held non-negotiable, although payable to order or bear

3 Co. Litt. 182; 2 Inst. 404; Vanheath v. Turner (Mich. Term) Winch, 24.

dealings between native and foreign merchants was extended to dealings between native merchants, but was confined to the persons of merchants, as apart from those pursuing other vocations. It was not until 1666 that courts declared that "the law of merchants is the law of the land, and the custom is good enough generally for any man, without naming him merchant." 5

er. Clark v. Farmers' Woolen Mfg. Co., 15 Wend. (N. Y.) 256; Parkinson v. McKim, 1 Pin. (Wis.) 214. In Fairbanks v. Sargent, 39 Hun (N. Y.) 588, 593, the court, in holding that the sealed coupon bond of an individual, payable to one Gray or bearer, was negotiable, said, in answer to the argument that at common law a seal deprives a bill or note of its negotiable character: "But since bonds of this kind have entered so largely into the financial and business transactions of the country, a more enlarged rule than that previously supposed to be applicable has been adopted for their disposition and the protection of persons receiving them in good faith and for value." It would seem, therefore, in the absence of statute, that an instrument not coutaining words of negotiability can become negotiable by custom. Smith v. Clark County, 54 Mo. 58. See Myers v. York & C. Ry. Co., 43 Me. 232; Jackson v. York & C. Ry. Co., 48 Me. 147; Augusta Bank v. City of Augusta, 49 Me. 507; Evertson v. National Bank of Newport, 66 N. Y. 14, 23 Am. Rep. 9; Jones, Corporate Bonds & Mortgages, §§ 185, 242. Compare Partridge v. Bank of England, 9 Q. B. 396; Webb v. Alexandria Water Co., 21 T. L. R. 572. See F. B. Palmer, The Negotiability of Debentures Payable to Bearer, 15 L. Q. R. 245-258. Unfortunately the Negotiable Instruments Law seems in many respects to prevent any change in the law merchant by the formation of new mercantile practices. The act applies not only to bills and notes, but to all negotiable instruments, including corporate bonds. N. I. L. §§ 1, 6 (subd. 4), 65, 191; Borough of Montvale v. People's Bank, 74 N. J. Law, 464, 67 Atl. 67; Hibbs v. Brown, 190 N. Y. 167, 82 N. E. 1108. In Strickland v. National Salt Co., 79 N. J. Eq. 182, 81 Atl. 828, 831, Swayze, J., said: "We are not to be understood, however, as holding that no instrument can hereafter acquire the elements of negotiability unless it answers the requirements of the statute (N. I. L.). Mr. Machen, in his excellent work on Corporations, at section 1740a, calls attention to the danger of holding that the Negotiable Instruments Law prevents a further development of the law merchant; but that question is not before us." See Maine Bank v. Smith, 18 Me. 101, 102.

4 Eaglechilde's Case, Het. 167; Litt. 363.

5 Woodward v. Rowe, 2 Keb. 105, 132. See, also, Anon., Hardr. 485, Mich. Term, 20 Car. II (1868), believed to be Milton's Case, vide 1

Of the many customs of merchants, there were two which were especially the subject of judicial interpretation. They were those concerning instruments which related to the remittance of money from one place to another, and in which credit was used as a means of liquidating indebtedness-instruments, in short, which are now called "bills of exchange" and "promissory notes." Of these, bills, and particularly foreign bills, are by far the more ancient. Anderson, in his History of Commerce, speaks of one granted by the Emperor Barbarossa to the city of Hamburg in the year 1189. "I remember," said Chief Justice Holt," "when actions upon inland bills of exchange did first begin; and there they laid a particular custom between London and Bristol, and it was an action against the acceptor. The defendant's counsel would put them to prove the custom, at which Hale, C. J., who tried it, laughed, and said they had a hopeful case of it. And in my Lord North's time it was said that the custom in that case was part of the common law of England, and these actions since became frequent, as the trade of the nation did increase, and all the difference between foreign bills and inland bills is that foreign bills must be protested before a public notary before the drawer can be charged, but inland bills need no protest." Between inland bills and promissory notes at first there was no distinction. Both were called indifferently bills of exchange. The law considered a promissory note in the light of a bill of exchange drawn by a man upon himself, and accepted at the time of drawing. And it is worthy of remark that the statement accepted by the text writers, and repeated again

Mod. 286; Carter v. Downish (1 W. & M., anno 1688) Show. 127. See, also, complete review of the cases on this subject in the reporter's note to Mandeville v. Riddle, 1 Cranch, 290, 2 L. Ed. 112.

61 And. Com. p. 171.

7 Buller v. Crips, 6 Mod. 29.

8 Grant v. Vaughan, 3 Burrows, 1525, 1 W. Bl. 488; Edgar v. Chut, 1 Keb. 592, 636; Horton v. Coggs (Mich. Term, 2 W. & M. 6, anno 1683) 3 Lev. 299.

9 Marius, in his Advice, p. 3; Lov. Bills & N. p. 22; Kyd, Bills. p. 2.

and again in the cases, that a promissory note was never within the custom of merchants, is incorrect.1o It was as much a mercantile instrument as a bill of exchange. It was introduced under the custom of merchants, and it was therefore, up to the time of the famous dispute between Lord Holt and the merchants which led to the enactment of the statute of Anne, a negotiable instrument. "The reason of making the statute of Anne," says Lord Hardwicke,11 "arose from some determinations in the beginning of her reign by Holt, Chief Justice, that no action could be maintained on a promissory note nor declaration thereupon." 12 In these decisions Lord Holt denounced promissory notes as "only an invention of the goldsmiths in Lombard street." He declared that "to allow such a note to carry any lien [obligation] with it were to turn a piece of paper, which is in law but evidence of a parol contract, into a specialty." 18 And, in defiance of established rules, Lord Holt refused to allow to promissory notes the privilege of negotiability.

10 Hill v. Lewis, 1 Salk. 132; Williams v. Williams (viz. Pasch. Term, 5 W. & M., anno 1692) Carth. 269; Bromwich v. Lloyd, 2 Lutw. 503.

11 Walmsley v. Child (anno 1749) 1 Ves. Sr. 346.

12 Clerk v. Martin, 1 Salk. 129, 2 Ld. Raymond, 757; Potter v. Pearson, 2 Ld. Raym. 759.

13 "The term 'specialty' is applied to an instrument which becomes effective by the mere fact of its formal execution. There are two classes of specialty contracts in the English law-common-law specialties and mercantile specialties. The first class includes bonds and covenants-i. e., instruments under seal; the second class includes bills and notes, and policies of insurance, and possibly other mercantile instruments. There is a prevalent notion, traceable to an opinion given in the House of Lords in 1778, in the case of Rann v. Hughes, 7 Term R. 350, note, that only contracts under seal can be specialties; all other contracts, whether written or oral, being merely simple contracts. The fallacy of this notion is easily demonstrable by an examination of the resemblances between bills and notes and instruments under seal, on the one hand, and the differences between bills and notes and simple contracts on the other hand, in those points in which specialties and simple contracts most strikingly differ from each other." 2 Ames Cas. Bills & N. 872.