TITLE II.-BILLS OF EXCHANGE.

ARTICLE I.

FORM AND INTERPRETATION.

Section 126. Bill of exchange defined.

127.

Bill not an assignment of funds; liability of drawee.

128. Bill addressed to two or more

drawees.

129. Inland and foreign bills.

130.

When bill may be treated as a promissory note.

131. Referee in case of need.

§ 126. Bill of Exchange Defined.-"A bill of exchange is an unconditional (Sec. 3) order in writing (Sec. 190) addressed by one person to another, signed (Sec. 1) by the person giving it, requiring the person to whom it is addressed to pay on demand (Sec. 7), or at a fixed or determinable future time (Sec. 4), a sum certain in money (Sec. 2), to order (Sec. 8) or to bearer (Sec. 9)."

The various elements of a bill of exchange which this section demands, have been covered

by notes to the proper sections. For definition of a bill of exchange, see Rice v. Hogan, 8 Dana 134; Biesenthal v. Williams, 1 Duv. 333; Gaar v. Louisville Banking Co., 11 Bush 186.

The signature of a drawer is essential to a bill of exchange. Tevis v. Young, 1 Met. 197.

§ 127. Bill Not Bill Not An Assignment of Funds Liability of Drawee.-"A bill of itself does not operate as an assignment of the funds in the hands of the drawee available for the payment thereof, and the drawee is not liable on the bill unless and until he accepts the same (Sec. 189)."

Where the drawee refuses to accept an order he cannot be compelled to pay, especially where the order is less than the amount due. Weinstock v. Bellwood, 12 Bush 139. But where he accepts the bill, it amounts to an assignment of the funds in his hands, though less than the amount of the bill. Buckner v. Sayre, 18 B. Mon. 746. For the rule on this point as to checks, see note to Section 189.

§ 128. Bill Addressed to Two or More Drawees.-"A bill may be addressed to two or more drawees jointly, whether they are partners or not; but not to two or more drawees in the alternative or in succession."

§ 129. Inland and Foreign Bills.-"An inland bill of exchange is a bill which is, or on its face purports to be, both drawn and payable within this State. Any other bill is a foreign bill. Unless the contrary appears on the face of the bill, the holder may treat it as an inland bill (Sec. 152).”

Formerly the question of whether or not a bill was inland or foreign was determined first by the face of the paper, and where it did not speak, by the facts of the case. A bill was inland which purported on its face to be or was in fact both drawn and payable within the same State. Taylor v. Bank of Illinois, 7 T. B. Mon. 576; Young v. Bennett, 7 Bush 477. Any bill was foreign which purported to be or was in fact drawn in one state and payable in another. Chenowith v. Chamberlain, 6 B. Mon. 61; Gray Tie & Lumber Co. v. Farmers' Bank, 109 Ky. 694, 60 S. W. 537, 22 K. L. R. 1333.

Where nothing appeared on the bill the holder was often at a loss to determine whether his bill was inland or foreign. In order to do away with this uncertainty, this section provides that the holder may treat any bill as inland which does not appear on its face to be foreign.

There is no conflict between the first two sentences of this section and the last. A bill is

inland which is in fact, or so purports on its face, both drawn and payable in this State. Any other is a foreign bill. The holder can preserve all his rights by proceeding according to the definition. But while in fact it may be a foreign bill, if it does not purport on its face to be such, the holder is protected if he treats it as an inland bill. The purpose of the last sentence is not to confuse inland with foreign bills, but to protect the holder against uncertainty. This is done by permitting him to treat as an inland bill one, which in fact is foreign, but which does not disclose that fact.

In Harmon v. Wilson, 1 Duv. 323, the bill did not show on its face where it was drawn, but it Idid show that the drawee resided in Ohio and the evidence showed the drawer resided in Kentucky. It was held a foreign bill. Under the above section we believe the same would be decided in a similar case.

It will be noticed that the above section does not provide that an inland bill is one which is drawn and payable within the same State, but "within this State." If this construction be right, the case of Piner v. Clary, 17 B. Mon. 660, would be good law; for if we treat the certificate of deposit in that case as a bill it does not show on its face that it was both drawn and payable in this State. In fact, it was both drawn and payable in

the State of Ohio, and would therefore seem to be a foreign bill under this section.

This is not the first time this State has by statute placed what under the law of merchant would be an inland bill on the footing of a foreign bill. In the early days charters were granted various banks which provided that all bills and notes discounted by them were placed on a footing of foreign bills. Under these charters it was held that an inland bill discounted by such a bank became in effect a foreign bill. Farmers' & Merchants' Bank v. Turner, 2 Litt. 13; Bank of Kentucky v. Brooking, 2 Litt. 41; Battertons v. Porter, 2 Litt. 388. See also Section 483 Kentucky Statutes.

§ 130. When Bill May Be Treated As a Promissory Note.-"Where in a bill drawer and drawee are the same person, or where the drawee is a fictitious person or a person not having capacity to contract, the holder may treat the instrument at his option, either as a bill of exchange or a promissory note (Sec. 17)."

In Gray Tie & Lumber Co. v. Farmers' Bank, 109 Ky. 694, 60 S. W. 537, 22 K. L. R. 1333, it was held that a bill drawn by an agent on his principal by the principal's authority was equiva