188.

189.

Certification of check equivalent to

acceptance.

Certification procured by holder.

Check does not operate as an assignment of fund.

§ 184. What Is a Negotiable Promissory Note?-"A negotiable promissory note within the meaning of this Act is an unconditional promise (Sec. 3) in writing (Sec. 190) made by one person to another, signed (Sec. 1) by the maker engaging to pay on demand (Sec. 7) or at a fixed or determinable future time (Sec. 4), a sum certain (Sec. 2) in money (Sec. 6) to order (Sec. 8) or to bearer (Sec. 9). Where a note is drawn to the maker's own order, it is not complete until endorsed by him."

This section revolutionized the law of Ken

tucky. This State held obstinately to the common law rule that a promissory note had only the virtues of a simple contract. To this there was but one exception and that had to be strictly followed. That exception was an implied liability on the part of an assignor.

At common law the assignee could not sue on such a contract in his own name, but had to proceed in the name of the assignor for the benefit of the plaintiff. This was changed by the Act of 1796 which vested in the assignee of all bonds, bills, notes of hand and all other writings the right to sue in his own name. This Act was repealed by the Act of February 10, 1798 (Littell's Statute Law of Kentucky, Vol. 2, page 75) which gave this right only to assignees of all bonds, bills, or notes for money or property. This law in various forms continued to the present and is now found in Section 474 of the Kentucky Statutes. So far from recognizing that promissory notes were different from ordinary contracts, this statute classified them with bonds for property.

But it was early in the history of this State discovered that there was a popular understanding that the assignor of a note in some way incurred a personal liability by his assignment. At common law there was only one implied warranty to the sale of personal property, and that was of

the title. There was no implied warranty of quality or value. In order to prevent what would have been a general fraud, the Court of Appeals seized upon and enforced this popular idea in Smallwood v. Woods, 1 Bibb. 532, saying: "The idea of the assignor's being responsible by his assignment, has been long and generally prevalent, strengthened and confirmed by these decisions, insomuch, that if at first erroneous, the maxim, 'communis error facit jus,' if applicable to any case, may now be well applied to this. The responsibility of the assignor may indeed be now embraced by a rule of ethics, that the expectation of the one party to an agreement, known, and silently indulged by the other party, ought to be fulfilled in the same manner as if it were expressed."

But this case carried the doctrine no further than to make the assignor refund the amount paid him by the assignee. This rule was codified in Section 475 Kentucky Statutes. The action was not on the note but to recover a consideration that had failed. This right was not then given until, with certain exceptions, the assignees had prosecuted with diligence the maker to insolvency and secured a return of nulla bona. This doctrine has always been strictly adhered to; and not even an allegation of insolvency is sufficient where no

such suit and diligence has been shown. Francis v. Gant, 80 Ky. 190.

Nor had an assignor any legal right against a remote assignee. Mardis v. Tyler, 10 B. Mon. 376. But he could proceed in equity against his immediate assignee and all remote assignees. McFadden v. Finnell, 3 B. Mon. 121. This was the limit of an assignee's rights against assignors.

Recognizing the necessities of the commercial world, the Legislature raised certain bills and notes to the footing of foreign bills of exchange, by providing in the charters of various banks that "all bills and notes discounted by it shall be placed on the footing of foreign bills of exchange." Farmers' & Merchants' Bank v. Turner, 2 Litt. 13; Bank of Kentucky v. Brooking, 2 Litt. 411; Battertons v. Porter, 2 Litt. 388. This was done in order to make such notes negotiable. Following precedent, the Legislature adopted almost verbatim the words of the Statute of 3rd and 4th Anne, c. 9, which declared that all promissory notes "shall have the same effect and be negotiable in like manner as inland bills of exchange according to the custom of merchants," changing the word "inland" to "foreign." By the Statute of 1865, Myer's Supplement, page 60, which is now found in Section 483 Kentucky Statutes, these special charters were supplanted by a