Negotiable Paper

(1.) Of the history of bills and notes.

IT is the general opinion, that the commerce of the ancients was carried on without the use of bills of exchange, and there is no vestige of them in the Roman law. A passage in the Pandects¹ shows it to have been the practice with the creditor who lent money on bottomry, or respondentia, to a foreign merchant, to send his slave to receive the loan, and maritime interest, on the arrival of the vessel at the foreign port. This certainly would not have been necessary, says Pothier,² if bills of exchange had been in use. But, however the fact may have been with the Romans, it would seem, from a passage in one of the pleadings of Isocrates, that bills of exchange were sometimes resorted to at Athens, as a safe expedient to shift funds from one country to another.³ Bills of exchange are of such indispensable use in the remittance of the value of money between distant places, without risk and expense, that foreign commerce cannot conveniently be carried on without them, and they grew into use on the coasts of the Mediterranean in the fourteenth century.⁴ As they serve the purposes of cash, and facilitate commerce, and are the visible representatives of large masses of property, they may truly be said to enlarge the capital stock of wealth in circulation, as well as increase the trade of the country.

Promissory notes are governed by the rules that apply to bills. The statute of 3d and 4th Anne, made promissory notes payable to a person, and to his order, or bearer, negotiable like inland bills, according to the custom of merchants. That statute has been generally adopted in this country, either formally, or in effect, and promissory notes are every where negotiable.⁵ The effect of the statute is to make notes, when negotiated, assume the shape and operation of bills, and to render the analogy between them so strong, that the rules established with respect to the one, apply to the other.⁶ It was a question much discussed before the statute of Anne, whether notes were not, by the principles of the law merchant, to be treated as bills, and Lord Holt vigorously and successfully resisted every such attempt.⁷ The history of that struggle is no longer interesting; but there is no doubt that promissory notes were recognized as mercantile instruments, and a species of bills of exchange, by the canon law, and the usage of trade; and even by the French ordinance of 1673, long before Lord Holt asserted them to be of late English inventions.⁸

My object in the present lecture is to endeavor to take a comprehensive, and, at the same time, precise and accurate view of the general doctrine, and most material rules relative to bills and notes: and to effect this purpose, I shall point out their essential qualities; the rights of the holder; the negotiation of them, and, the requisite steps to fix the responsibility of the several parties whose names are upon the paper.

(2.) Of the essential qualities of negotiable paper.

A bill of exchange is a written order or request, and a promissory note a written promise, by one person to another, for the payment of money, absolutely, and at all events.⁹ If A., living in New York, wishes to receive 1000 dollars, which awaits his orders in the hands of B., in London, he applies to C., going from New York to London, to pay him 1000 dollars, and take his draft on B. for that sum, payable at sight. This is an accommodation to all parties. A. receives his debt by transferring it to C., who carries his money across the Atlantic, in the shape of a bill of exchange, without any danger or risk in the transportation, and on his arrival at London, he presents the bill to B., and is paid.

This is the plain and familiar illustration of this mode of remittance, given by Sir William Blackstone; and the practice is so very convenient, and suggests itself so readily, and gives such extension to credit, and circulation to capital, that it would seem almost impossible that it should not have been in use in the earliest periods of commerce. A., who draws the bill, is called the drawer. B., to whom it is addressed, is called the drawee, and, on acceptance, he becomes the acceptor. C., to whom the bill is made payable, is called the payee. As the bill is payable to C., or his order, he may, by endorsement, direct the bill to be paid to D., and, in that case, C. becomes the endorser, and D., to whom the bill is endorsed, is called the endorsee, or holder. A check partakes more of the character of a bill of exchange than of a promissory note. It is, in form and effect, a bill of exchange. It is not a direct promise by the drawer to pay, but it is an undertaking on his part that the drawee shall accept and pay, and the drawer is answerable only in the event of the failure of the drawee to pay.¹⁰

A bill or note is not confined to any set form of words. A promise to deliver, or to be accountable, or to be responsible for so much money, is a good bill or note, but it must be exclusively and absolutely for the payment of money. In England, negotiable paper must be for the payment of money¹¹ in specie, and not in bank notes.¹² In this country, it has been held, that a note payable in bank bills was a good negotiable note within the statute, if confined to a species of paper universally current as cash.¹³ But the doctrine of these cases has been met and denied,¹⁴ and I think the weight of argument is against them, and in favor of the English rule. It is essential that the bill carry with it a personal credit, given to the drawer or endorser, and that it be not confined to credit, upon any future or contingent event or fund. The payment must not rest upon any contingency, except the failure of the general personal credit of the person drawing or negotiating the instrument.¹⁵ It would perplex the commercial transactions of mankind, if paper securities of this kind were encumbered with conditions and contingencies, and if the persons to whom they were offered in negotiation, were obliged to inquire when those uncertain events would probably be reduced to a certainty. But if the event on which the instrument is to become payable, be fixed and certain, and must happen, as if the bill be drawn payable six weeks after the death of the maker’s father, it is a good bill, and it is of no consequence how long the payment is to be postponed.¹⁶

Nor is it necessary that the note should be made at home. Foreign, as well as inland notes, are equally negotiable within the statute of Anne.¹⁷ It is a general principle, that all contracts, as to their nature, validity and construction, are governed by the lex loci contractus, unless they had reference in respect to the performance of them to the laws of other places, and in that case they are to be governed by those laws; and as the endorsement is equivalent to a new contract as between the parties to it, the note may be regulated by the laws of one place, and the endorsement by those of another. This is the doctrine which has been amply recognized in England,. and in this country, and it constitutes part of the code of international law. Locus regit actum, and, by the law of nations, every personal contract which is valid where it was made, is valid everywhere, unless condemned by some positive regulation of the state, or some strong rule of public policy.¹⁸ There is a difference taken in the cases between the construction and the execution of the contract. The lex loci has reference only to the nature and construction of the contract, and its legal effect, and not to the mode of enforcing it. The remedy must be pursued by the means which the law points out where the party resides.¹⁹

The instrument must be made payable to the payee, and to his order or assigns, or to bearer, in order to render it negotiable. It must have negotiable words on its face, showing it to be the intention to give it a transferrable quality. Without them it is a valid instrument as between the parties, and is entitled to the allowance of the three days of grace, and may he declared on as a promissory note within the statute. But if it wants negotiable words, it cannot be transferred, or negotiated, so as to enable the assignee to sue upon it in his own name.²⁰ If the name of the payee or endorsee be left blank, any bona fide holder may insert his own name as payee.²¹

It is usual to insert the words value received, in a bill or note; but they are unnecessary, and value is implied in every bill, note, and endorsement. These words are not usual in checks, which are negotiable, like in land bills, and are governed by the same rules.²² Nor is it necessary that the maker should subscribe his name at the bottom of the note; and it is sufficient if the maker’s name be in any part of the note, as if it should run, I, A. B. promise to pay C. D., or order, one hundred dollars.²³ This is, however, so much out of the common course, that a note wanting the usual subscription would be deemed imperfect, and it would, in point of fact, destroy its currency, and the public would very reasonably conclude, that the note had been left unfinished, and had got into circulation by fraud or mistake. If the note be payable to B., or bearer, it need not be endorsed; and it is the same, in effect, as if the name of B. had been omitted. The bearer may sue in his own name, on showing that he came by the note bona fide, and for a valuable consideration.²⁴ So, a bill or note, payable to a fictitious person, may be sued by an innocent endorsee, as a note payable to bearer; and such a bill or note is good against the drawer or maker, and will bind the acceptor, if the fact that the payee was fictitious was known to the acceptor.²⁵

(3.) Of the rights of the holder.

Possession is prima facie evidence of property in negotiable paper, payable to bearer, or endorsed in blank, and such a bona fide holder can recover upon the paper, though it came to him from a person who had stolen or rubbed it from the true owner, provided he took it innocently, in the course of trade, for a valuable consideration, and under circumstances of due caution; and he need not account for his possession of it unless suspicion be raised.²⁶ This doctrine is founded on the commercial policy of sustaining the credit and circulation of negotiable paper. Suspicion must be cast upon the title of the holder, by showing that the instrument had got into circulation by force or fraud, before the onus is cast upon the holder of showing the consideration he gave for it.²⁷ So much protection, for the sake of trade, is given to the holder of negotiable paper, who receives it fairly in the way of business, that he can recover upon it though it has been paid, if he received it before it fell due. Where one has done a mercantile act, said Lord Ch. Baron Gilbert, he subjects himself to mercantile law.²⁸

There seems to be but two cases in which a bill or note is void in the hands of an innocent endorsee for valuable consideration; and these cases are, when the consideration in the instrument is money won at play, or it be given for a usurious debt. The English statutes against usury and gaming (and which have been adopted in this state, and, generally throughout the United States) are peremptory, and make the bill or note absolutely void.²⁹ The same rule would, of course, apply to every case in which the contract is by statute declared absolutely void.

As between the original parties to negotiable paper, these provisions in favor of the bona fide assignee do not apply, and the consideration of a bill, note, or check, may be inquired into. It may be inquired into between the maker and payee, and between the endorser and endorsee, for the latter are, in this view, treated as original parties.³⁰ The rule equally applies when the endorsee took the paper with notice of the illegal consideration, or of the want of it, or of any circumstances which would have avoided the note in the hands of the endorser;³¹ or when taken not in the course of mercantile business, or after it was due.³²

It was admitted, in Bay v. Coddington,³³ that negotiable paper could be assigned or transferred by an agent, or any other person, fraudulently, so as to bind the true owners as against the holder, if it was taken by him in the usual course of trade, and for a fair and valuable consideration, without notice of the fraud. But it was held, that if the paper be not negotiated in the usual course of business, nor in payment of any antecedent and existing debt, nor for cash, or property advanced upon it, nor for any debt credited, or responsibility incurred, upon the credit of the note, but was taken from the agent of the owner of the note after he had stopped payment, and. as security against contingent responsibilities previously incurred, the rights of the true, owner were not barred. Such a case did not come within the reason or necessity of the rule which protects the purchaser of paper fraudulently assigned, because it was not a case in the course of trade, nor was credit given, or responsibility assumed, on the strength of the paper. In any case in which the endorsee takes the paper under circumstances which might reasonably create suspicions that it was not good, he takes it at his peril. The rule is usually applied to the case of notes over due, but the principle is of general application.³⁴

In Gill v. Cubitt,³⁵ the court of K. B. made a strong application of the principle, and held, that if an endorsee takes a bill heedlessly, and without due caution, and under circumstances which ought to have excited the suspicions of a prudent and careful man, the maker or acceptor may be let in to his defense. It was deemed material for the interests of trade, that a person should he deemed to take negotiable paper at his peril, if he takes it from a stranger without due inquiry, how he came by the bill. He is bound to exercise a reasonable caution, which prudence would dictate in such a case; and It is a question of fact for a jury, whether the owner of the lost or stolen bill had used due diligence in apprising the public of the loss, and whether the purchaser of the paper had, under the circumstances of the case exercised a reasonable discretion, and acted with good faith and sufficient caution, in the receipt of the bill. The doctrine of Lord Kenyon, in Lawson v. Weston,³⁶ is expressly overruled. ‘This new doctrine, imposing upon the owner due diligence in giving to the public notice of the loss, and upon the purchaser of the bill due caution and inquiry, is supposed to be calculated to increase the circulation and security of negotiable paper, and to render it more difficult for thieves and robbers to pass it off.

(4.) Of the acceptance of the bill.

There is no precise time fixed by law in which bills payable at sight, or by a given time, must be presented to the drawee for acceptance. The holder need not take the earliest opportunity. A bill payable at a given time after date, need not be presented for acceptance before the day of payment; but if presented, and acceptance be refused, it is dishonored, and notice must then be given to the drawer.³⁷ A bill payable sixty days after sight, means sixty days after acceptance, and such a bill, as well as a bill payable on demand, must be presented in a reasonable time, or the holder will have to bear the loss proceeding from his default.³⁸

The acceptance may be by parol, or in writing, and general or special.³⁹ Though a bill comes into the hands of a person with a parol acceptance, and he takes it in ignorance of such an acceptance, he may avail himself of it afterwards. If the acceptance be special, it binds, the acceptor sub modo, and according to the acceptance. But any acceptance varying the absolute terms of the bill, either in the sum, the time, the place, or the mode of payment, is a conditional acceptance, which the holder is not bound to receive; and if he does receive it, the acceptor is not liable for more than he has undertaken. The doctrine of qualified acceptances as to part of the money, is spoken of in Marius and Molloy;⁴⁰ and in the case of Rowe v. Young, in the House of Lords, it was established to be the true construction of the contract, and the true rule of the law merchant, that if a bill be accepted payable at a particular place, the holder is bound to make the demand at that place.⁴¹ The rule is also settled, that a promise to accept, made before the acceptance of the bill, will amount to an acceptance in favor of the person to whom the promise was communicated, and who took the bill on the credit of it.⁴²

In Coolidge v. Payson,⁴³ all the cases were reviewed, and it was held, that a letter, written within a reasonable time before or after the date of the bill, describing it, and promising to accept of it, is, if shown to the person who afterwards takes the bill upon the credit of that letter, a virtual acceptance, and binding upon the person who makes the promise. The same doctrine was also held by the Supreme Court of New York in Goodrich v. Gordon,⁴⁴ and it was there decided, that if a person, in writing, authorizes another to draw a bill of exchange, and stipulates to honor the bill, and the bill be afterwards drawn, and taken by a third party, on the credit of that letter, it is tantamount to an acceptance of the bill. The doctrine rests upon the decisions of Lord Mansfield in Pillans and Rose v. Van Mierop and Hopkins,⁴⁵ where he laid down the broad principle, that a promise to accept previous to the existence of the bill, amounted to an acceptance. It is giving credit to the bill, and which maybe done as entirely by a letter written before, as by one written after the date of the bill.

Every act giving credit to the bill amounts to an acceptance.⁴⁶ There is no doubt that an acceptance, once fairly and fully made and consummated, cannot be revoked; but to render it binding, the acceptance must be a complete act, and an absolute assent of the mind; for though the drawee writes his name on the bill, yet if before he has parted with the bill, or communicated the fact, he changes his mind and erases his acceptance, he is not bound.⁴⁷ The acceptance may be impliedly, as well as expressly given. It may be inferred from the act of the drawee, in keeping the bill a great length of time, contrary to his usual mode of dealing, for this is giving credit to the bill, and inducing the holder to consider it accepted.⁴⁸ If the bill be accepted in a qualified degree only, and not absolutely, according to the tenor of it, the holder may accept it, and it will be a good acceptance, pro tanto, or he may insist upon an absolute acceptance, and for the want of it protest the bill. It is in the discretion of the holder whether or no he will take any acceptance varying from the terms of the bill. This doctrine was settled in England upwards of a century ago, and in opposition to the distinguished argument of Sir John Strange, and it has continued unshaken to this day.⁴⁹

The acceptor of a bill is the principal debtor, and the drawer the surety, and nothing will discharge the acceptor but payment, or a release. He is bound, though he accepted without consideration, and for the sole accommodation of the drawer. Accommodation paper is now governed by the same rules as other paper. This is the latest and the best doctrine, both in England and in this, country.⁵⁰ If the acceptor alters the bill on acceptance, he vacates it as against drawer and endorsers; but if the holder acquiesces in such alteration and acceptance, it is a good bill as between the holder and acceptor.⁵¹

A third person, after protest for non-acceptance by the drawee, may intervene, and become party to the bill, in a collateral way, by accepting and paying the bill for the honor of the drawer, or of a particular endorser. His acceptance is termed an acceptance supra protest, and he subjects himself to the same obligations as if the bill had been directed to him. He has his remedy against the person for whose honor he accepted, and against all the parties who stand prior to that person. If he takes up the bill for the honor of the endorser, he stands in the light of an endorsee paying full value for the bill, and has the same remedies to which an endorsee would be entitled against all prior parties, and he can, of course, sue the drawer and endorser.⁵² The acceptance, supra protest, is good, though it be done at the request, and under the guaranty of the drawee after his refusal, and the party for whose honor it is paid is equally liable.⁵³

The policy of the rule granting these privileges to the acceptor, supra protest, is to induce the friends of the drawer or endorser to render them this service, for the benefit of commerce and the credit of the trader, and a third person interposes only when the drawee will not accept. There can be no other acceptor after a general acceptance by the drawee. A third person may become liable on his collateral undertaking, as guarantying the credit of the drawee, but he will not be liable in the character of acceptor. It is said, however, that when the bill has been accepted, supra protest, for the honor of one party to the bill, it may, by another individual, be accepted, supra protest, for the honor of another.⁵⁴ The holder is not bound to take an acceptance, supra protest;⁵⁵ but he would be bound to accept an offer to pay, supra protest. The protest is necessary, and should precede the collateral acceptance or payment;⁵⁶ and if the bill, on its face, directs a resort to a third person, in case of refusal by the drawee, such direction becomes part of the contract.⁵⁷

As between the holder of a check and the endorser, it ought to be presented for acceptance with due diligence;⁵⁸ but as between the holder and the drawer, a demand at any time before suit brought will be sufficient, unless it appears that the drawee has failed, or the drawer has, in some other manner, sustained injury by the delay.⁵⁹ The drawee ought to accept or refuse acceptance, as soon as he has had a reasonable opportunity to inform his judgment. If he cannot be found at the proper place, the holder may cause the bill to be protested; and if the drawee be dead, the bill may be presented to his executor or administrator.⁶⁰

(5.) Of the endorsement.

A valid transfer may be made by the payee, or his agent. In the case of a bill made or endorsed to a feme sole, who afterwards marries, the right to endorse it belongs to the husband. So, the assignee of an insolvent payee, or the executor or administrator of a deceased payee, are entitled to endorse the paper.⁶¹ And if a bill be made payable to a mercantile house consisting of several partners, an endorsement by any one of the partners is deemed the act of the firm. If the bill be made payable to A., for the use of B,. the legal title is in A., and he must endorse it.

The bill cannot be endorsed for a part only of its contents, unless the residue has been extinguished; for a personal contract cannot be apportioned, and the acceptor made liable to separate actions by different persons.

Blank endorsements are common, and they may be filled up at any time by the holder, even down to the moment of trial in a suit to be brought by him as endorsee; but no other use can be made of a blank endorsement in filling it up, than to point out the person to whom the bill or note is to be paid. A note endorsed in blank is like one payable to bearer, and passes by delivery, and the holder may constitute himself, or any other person, assignee of the bill. The courts never inquire whether he sues for himself, or as trustee for some other person.⁶² Even a bond made payable to bearer has been held to pass by delivery, in the same manner as a bank note payable to bearer. or a bill of exchange endorsed in blank.⁶³ The holder may strike out the endorsement to him, though full, and all prior endorsements in blank except the first, and charge the payee or maker.⁶⁴

There is no necessity for any negotiable words in the endorsement. A bill originally negotiable, continues so in the hands of the endorsee, unless the general negotiability be restrained by a special endorsement by the payee. He may stop its negotiability by a special endorsement, but no subsequent endorsee can restrain the negotiable quality of the bill.⁶⁵ The first endorser is liable to every subsequent bona fide holder, even though the bill or note be forged, or fraudulently circulated.⁶⁶ If a blank note or check be endorsed, it will bind the endorser to any sum, or time of payment, which the person to whom he entrusts the paper chooses to insert in it.⁶⁷ This only applies to the case in which the body of the instrument is left blank. If negotiable paper, regularly filled up, be endorsed in blank, the endorser is holden only in the character of endorser,⁶⁸ and according to the terms and legal operation of the instrument.

In the case of blank endorsements, possession is evidence of title; but if the endorsements be all filled tip, the first endorsee cannot sue without showing that he had taken up the bill or note. The acceptor or maker is liable only to the last endorsee. The prior endorsers have parted with their interest in the paper, and are presumed to have received a valuable consideration for it. But if the last endorsee protests the bill for non-payment, and it be paid by a prior endorser, the latter acquires, by such payment, a new title to the instrument.⁶⁹

Though the holder of paper fairly negotiated, be entitled to recover, and to shut out almost every equitable defense, yet the rule applies only to the case of negotiable paper taken bona fide in the course of business before it falls due. If taken after it is due and payable, the presumption is against the validity of the demand, and the purchaser takes it at his peril, and subject to every defense existing against it before it was negotiated.⁷⁰ But it has been a question, when a note, payable upon demand, is to be deemed a note out of time, so as to subject the endorsee, upon a subsequent negotiation of it, to the operation of the rule. When the facts and circumstances are ascertained, the reasonableness of time is matter of law, and every case will be depend upon its special circumstances. Eighteen months, eight months, seven months, five months, even two months and an half, have been held, when unexplained by circumstances, an unreasonable delay; and if the demand be not made in a reasonable time by the holder, the endorser is discharged.⁷¹ On the other hand, in Thurston v. McKown,⁷² a note payable on demand, and endorsed within seven days after it was made, was held to be endorsed in season to close all inquiry into the origin of the note. And when a note is negotiated in season, it may afterwards pass from one endorsee to another, after it is due, and the holder will be equally with the first endorsee protected in his title.⁷³

There is no certain time in which a bill, payable at sight, or a given time thereafter, must be presented for acceptance. It must not be locked up for any considerable time; but if put into circulation, the courts are very cautious in laying down any rules as to the time in which it must be presented; and in one case, it was allowed to be kept in circulation without acceptance, so long as the convenience of the successive holders might require.⁷⁴ That was the case of a foreign bill; and an inland bill may also be put in circulation before acceptance, and it may he kept a reasonable time before acceptance; but what would be a reasonable time cannot be precisely defined, and depends upon the particular circumstances of each case.⁷⁵ If a bill or note be absolutely assigned so as to pass the whole interest in the instrument to the endorsee, its negotiable quality would pass with it; and the better opinion would seem to be, that its negotiability could not be impeded by any restriction contained in the endorsement.⁷⁶ But where the endorsement is a mere authority to receive the money for the use, or according to the directions of the endorser, it would be evidence that the endorsee did not give a valuable consideration, and was not the absolute owner. A negotiable instrument may be endorsed so as to exempt the endorser from liability, as if the endorser should add, at his own risk, or without recourse. In that case, the maker or acceptor, and prior endorsers, would be holden, according to the rules and usages of commercial paper, but the immediate endorser would be exempted from responsibility by the special contract.⁷⁷

If the bill or note be negotiated after it is due, and be thereby opened to every equitable defense, yet a demand must be made upon the drawee or maker within a reasonable time, and notice given to the endorser in order to charge him, equally as if it had been a paper payable at sight or negotiated before it was due.⁷⁸

(6.) Of the demand and protest.

The demand of acceptance of a foreign bill is usually made by a notary, and in case of non-acceptance he protests it, and this notaria1 protest receives credit in all courts and places by the law and usage of merchants, and it is a requisite step by the custom of merchants in the case of a foreign bill, and must be made promptly upon refusal. It is sufficient, however, to note the protest on the day of the demand, and it may be drawn up in form at a future period. The protest is necessary for the purpose of prosecution, and it must be stated and proved in a suit on the bill.⁷⁹ On inland bills no protest was required by the common law, and it was only made necessary by the statutes of 9th and 10th Wm. III. and 3d and 4th Anne, which have not been adopted in New York, and, therefore, such protest need not de made in this state.⁸⁰ After the protest for non-acceptance, immediate notice must be given to the drawer and endorser, in order to fix them, and the omission would not be cured by the bill being presented for payment and subsequent notice of the non-payment, as well as non-acceptance.⁸¹ The drawer or endorser may be sued forthwith upon the protest for non-acceptance, without waiting until the bill is also presented for payment, and refused.⁸²

The English law requiring protest, and notice of non-acceptance of foreign bills, has been adopted and followed as the true rule of mercantile law in the states of Massachusetts, Connecticut, New York, and South Carolina.⁸³ But the Supreme Court of the United States, in Brown v. Barry,⁸⁴ and in Clarke v. Russel,⁸⁵ held, that, in an action on a protest for non-payment on a foreign bill, a protest for non-acceptance, or a notice of the nonacceptance, need not be shown, inasmuch as they were not required by the custom of merchants in this country, and those decisions have been followed in Pennsylvania.⁸⁶ It becomes, therefore, a little difficult to know what is the true rule of the law merchant in the United States, on this point, after such contradictory decisions. The Scotch law is the same as the English,⁸⁷ and it appears to me, that is the better doctrine, and most consistent with commercial policy.

If the bill has been accepted, demand of payment must be made when the bill falls due; and it must be made by the holder or his agent upon the acceptor, at the place appointed for payment, or at his house or residence, or upon him personally if no particular place be appointed, and it cannot be made by letter through the post office.⁸⁸ But there is a great deal of perplexity and confusion in the cases on this subject, arising from refined distinctions and discordant opinions; and it becomes very difficult to know what is precisely the law of the land, as. to the sufficiency of the demand upon the maker of the note; or the acceptor of the bill. If there be no particular and certain place identified and appointed, other than a city at large, and the party has no residence there, the bill may be protested in the city on the day without inquiry, for that would bean idle attempt.⁸⁹

The general principle is, that due diligence must be used to find out the party, and make the demand; and the inquiry will always he, whether, under the circumstances of the case, due diligence has been used. If the party has absconded, that will, as a general rule, excuse the demand.⁹⁰ If he has changed his residence to some other place, within the same state or jurisdiction, the holder must make endeavors to find it, and make the demand there; though if he has removed out of the state, subsequent to the making of the note or accepting the bill, it is sufficient to present the same at his former place of residence.⁹¹ If there be no other evidence of the maker’s residence than the date of the paper, the holder must make inquiry at the place of date; and the presumption is, that the maker resides where the note is dated, and that he contemplated payment at that place.⁹² But it is presumption only; and if the maker resides elsewhere within the state when the note falls due, and that be known to the holder, demand must be made at the maker’s place of residence.⁹³

The rule in the English law is, that if a promissory note be made payable at a particular place, the demand must be made at the place, because the place is made part and parcel of the contract.⁹⁴ If, however, the place appointed be deserted or shut up, it amounts to a refusal to pay, and a demand would be inaudible and useless;⁹⁵ or if the demand be made upon the maker elsewhere, and no objection be made at the time, it will be deemed a waiver of any future demand.⁹⁶

In this state it has been decided,⁹⁷ that though a bill or note be made payable at a particular place, it is not requisite for the holder to aver or prove a demand of payment at the place. This would appear to be contrary to the rile as now understood and established in the English law; and it would seem to he contrary to the opinion of the Court of Errors of this state, in the case of Woodworth v. The Bank of America,⁹⁸ where the rule of the English law was recognized, that if the place of payment be designated in the note, demand must be made there. But if the person, at whose place or house the note or bill is made payable, be the holder of the paper, in that case it has been held by the Supreme Court of the United States,⁹⁹ to be sufficient for the holder to examine. the accounts, and ascertain that the party who is to pay there has no funds deposited. The maker or acceptor is in default by not appearing and paying, and no formal demand is necessary. The cases of Saunderson v. Judge, and Berkshire Bank v. Jones,¹⁰⁰ were deemed to be controlling authorities on the point. The case of Caldwell v. Cassidy adopted a further distinction on this already subtle and embarrassing point, and held, that though, in the case of a note payable at a particular place, demand at that place need not be averred; yet if the note be made payable on demand at a particular place, a demand must be made at the place before suit brought.

With respect to the addition of memoranda to a bill or note, designating the place of payment, there have been much litigation and difficulty in the cases. It is stated as a general rule,¹⁰¹ that a memorandum upon a note as to where it should be payable, was not a part of it; and in Exon v. Russell,¹⁰² such a memorandum at the bottom of the note was held to be no part of it. On the other hand, in Cowie v. Halsall,¹⁰³ after a bill had been accepted generally, the drawer, without the consent of the acceptor, added a place of payment, and it was held, that the addition was a material variation, and discharged the acceptor. In the case of The Bank of America v. Woodworth,¹⁰⁴ a note was endorsed for the accommodation of the maker, and returned to him to be negotiated. It had no place of payment, and before the maker had parted with it, he added in the margin a place of payment, and negotiated it, and the bona fide holder made the demand there. The Supreme Court held that the memorandum was no part of the contract, but merely an intimation to the holder where to look, for the maker and his funds. But the Court of Errors decided otherwise, and overturned this very reasonable, and established the very rigorous doctrine, that the memorandum was, in that case, a material alteration of the contract, which discharged the endorser. The Supreme Court of this state have since decided,¹⁰⁵ that where the endorser commits a negotiable note to the maker, with a blank for the date or sum, or time of payment, there is an implied agency given by the endorser to the maker to fill up the blanks. The principle of the decisions in Massachusetts is, that if the endorsement be made at the time of making the note, the endorser is to be treated as an original promissor, because he is supposed to participate in the consideration.¹⁰⁶

If a bill of exchange, though drawn generally, be accepted, payable at a particular place, it is a special or qualified acceptance, which the holder is not bound to take; but. if he does take it, the demand must be made at the place appointed, and not elsewhere. This is the plain sense of the contract, and the words accepted payable at a given place, are equivalent to an exclusion of a demand elsewhere.¹⁰⁷

Three days of grace apply equally, according to the custom of merchants, to foreign and inland bills and promissory notes.¹⁰⁸ and the acceptor or maker has within a reasonable time of the end of business, or bank hours, of the third day of grace, (being the third day after the paper falls due,) to pay. It has been said,¹⁰⁹ that the acceptor was bound to pay the bill on demand, on any part of the third day of grace, provided the demand be made within reasonable hours. Lord Kenyon thought otherwise. The question will be governed, in a degree, by the custom of the place; and if, in a commercial city, payments are made at the banks, they must be made within bank hours. The maker or acceptor is entitled to the uttermost convenient time allowed by the custom of business of that kind, in the place where the bill is presented, and he is not entitled to any further time. If the third day of grace falls on Sunday, or a great holiday, as the fourth of July, or a day of public rest, the demand must be made on the day preceding.¹¹⁰ The three days of grace apply equally to bills payable at. sight.¹¹¹ A bill payable at so many days sight, means so many days after legal sight, or acceptance;¹¹² and when the time is to be computed by days, as so many days after sight, the day of the date of the instrument is, by the modern practice, excluded.¹¹³

It is equally unseasonable, to demand payment before the expiration of the third day of grace, as after the day. The demand must be made on the third day of grace, or on the second, if the third day be a day of public rest; and in default of such demand, the drawer of the bill, and the endorser of the note, are discharged.¹¹⁴ If, however, a note be made for negotiation at a bank, whose custom is to demand payment, and to give notice, on the fourth day, that custom forms a part of the law of the contract, and the parties are presumed to agree to be governed, in that case, by the usage.¹¹⁵ The same rule applies, when a bank, by usage, treats a particular day as a holiday, though not legally known as such, and make demands, and give notice, on the day preceding; the parties to a note discounted there, and conusant of the usage, are bound by it.¹¹⁶ Though a bill, payable at a given time, has never been presented to the drawee for acceptance, the demand upon the drawee for payment is to be made on the third day of grace; for, by the usage of the commercial world, which now enters into every bill and note of a mercantile character, except where it is positively excluded, a bill does not become due on the day mentioned on its face, but on the last day of grace.¹¹⁷

(7.) Of the steps requisite to fix the drawer and endorsers.

There is no part of the learning relating to negotiable paper, that has been more critically discussed, or in which the rules are laid down with more precision, than that which concerns the acts requisite to fix the responsibility of the drawer and endorsers, and the acts and omissions which will operate to discharge them. True policy consists in establishing some broad plain rules, easy to be understood, and steady in their obligation.

The holder must not only show a demand, or due diligence to get the money of the drawee of the bill or check, and of the maker of the note, but he must give reasonable notice to the drawer and endorsers, of their default, to entitle himself to a suit against them.¹¹⁸ Notice to one of several partners. or to one of several joint drawers or endorsers, is notice to them all.¹¹⁹ What is reasonable notice to the drawer or endorser, is sometimes said to be a question of law, and at other times to be a question of fact. The question of reasonable notice is usually compounded of law and fact, and proper for the decision of a jury, under the advice and direction of the court; and the mixed question requires the application of the powers of the court and jury.¹²⁰ The elder cases did not define what amounted to due diligence in giving notice of the dishonor of a bill, with that exactness and certainty which practical men, and the business of life, required.

According to the modern doctrine, the notice must be given by the first direct and regular conveyance. This means, the first convenient and practicable mail that goes on the day next to the third day of grace; so that if the third day of grace be on Thursday, and the drawer or endorser reside out of town, the notice may, indeed, be sent on Thursday, but must be sent by the mail that goes on Friday; and if the parties live in the same town, the rule is the same, and the notice must be sent by the penny-post, or other carrier, on Friday. The law does not require excessive diligence, or that the holder should watch the post office constantly, for the purpose of receiving and transmitting notices. Reasonable diligence and attention is all that the law exacts; and it is settled, that each party into whose hands a dishonored bill may pass, shall be allowed one entire day for the purpose of giving notice. If the demand he made on Saturday, it is sufficient to give notice to the drawer or endorser on Monday, and putting the notice by letter into the post office, is sufficient, though the letter should happen to miscarry. If the holder uses the ordinary mode of conveyance, he is not required to see that the notice is brought home to the party.

Nor is it necessary to send by the public mail. The notice may be sent by a private conveyance, or special messenger, and it would be good notice, though it should happen to arrive a little behind the mail. Where the parties live in the same town, and within the district of the letter carrier, it is sufficient to give notice by letter through the post office. If there be no penny-post that goes to the quarter where the drawer lives, the notice must be personal, or by a special messenger sent to the dwelling house; and notice, in all cases, is good, if left at the dwelling house of the party in a way reasonably calculated to bring the knowledge of it home to hire, and if the house he shut up by a temporary absence, still the notice may be left there. If the parties live in different towns, the letter must he forwarded to the post office nearest to the party, though, under certain circumstances, a more distant post office may do; but the cases have not defined the precise distance from a post office at which the party must reside, to render the service of notice through the post office good.¹²¹

The notice must specify that the bill is dishonored, and the design of it is, that the drawer may be enabled to secure his claim against the acceptor, and the endorser against the maker, and the notice may come from any person who is a party to the bill.¹²² So, any agent, having possession of the bill, may give the notice, and it treed not state at whose request it was given, nor who was the owner of the bill. There is no precise form of the notice. It is sufficient that it state the fact of non-payment, and that the holder looks to the endorser.¹²³ The party receiving notice is bound to give notice likewise to those who stand behind him, and to whom he means to resort for indemnity; and if a second endorser, on receiving notice of the dishonor of the bill, should neglect to give the like notice, with due diligence to the first endorser, the latter would not be liable to him.¹²⁴

It is not necessary, in the case of notice of the non-acceptance, or non-payment of a bill, that a copy of the bill and protest should accompany the notice. It is sufficient to give notice of the fact.¹²⁵ If several parts, as is usual, of a bill of exchange, be drawn, they all contain a condition to be paid provided the others remain unpaid, and they collectively amount to one bill, and a payment to the holder of either is good, and. a payment of one of a set is payment of the whole. The drawer or endorser, to be charged on non-acceptance or non-payment, is entitled to call for the protest, and the identical bill, or number of the set protested, before he is bound to pay; and it would he sufficient to produce it at the trial, or account for its absence.¹²⁶ His rights attach to the bill that has been dishonored, and he is entitled to call for it. He may want it for his own indemnity, and without it he might. be exposed to claims from some bona fide holder, or person, who had paid it supra protest, for his honor.

There are many cases in which notice is not requisite, or the want of it waived.

If the drawee refuses to accept, because he has no effects of the drawer in hand, notice to the drawer is not necessary. This exception to the general rule proceeds on the ground of fraud in the drawer; but the courts have regretted the existence of the exception, and they confine it strictly to the case of want of effects, and where the drawee is not indebted to the drawer, and to other cases in which the drawer had no right to expect that his bill would be honored. Notice is requisite, if the want of it would produce detriment; as if, in case notice had been given, and the bill taken up, the drawer would have had his remedy over against some third person; or if it was drawn with a bona fade expectation of assets in the hands of the drawee, as upon the faith of consignments not come to hand, or upon the ground of some fair mercantile agreement.¹²⁷

The exception applies only to the drawer, and not to the endorser of a bill drawn without funds; and it is now settled in England, in France, and in this country, that neither the insolvency of the drawer, or drawee, or acceptor, or the fact that the drawee had absconded, does away the necessity of a demand of payment, and notice to the drawer; nor dots knowledge in the endorser, when he endorsed the paper, of the insolvency of the maker of the note, or druwee of the bill, do away the necessity of notice, in order to charge him.¹²⁸ It was left undecided in Rhode v. Proctur,¹²⁹ whether, in the case of the bankruptcy of the party entitled to notice, the holder was bound to give notice to the assignees; though the intimation in that, and other cases, is, and it is clearly the better opinion, that the notice to the assignees would be proper, if assignees had been chosen when notice was to be given.¹³⁰

Giving time by the holder to the acceptor of a bill, after the drawer has been fixed, will discharge the other parties to the bill; but the agreement for delay must be one having a sufficient consideration, and binding in law upon the parties.¹³¹ If the holder gives time to the endorser, knowing that the note was made for his accommodation, he does not thereby discharge the drawer.¹³² Simply forbearing to sue the acceptor, or taking collateral security from him is no discharge, but giving him new credit and time, or accepting a composition in discharge of the acceptor, will produce that result. The principle is, that the drawer and endorser are in the light of sureties for the acceptor, and the holder must do nothing to impair the right which they have to resort to the acceptor for indemnity, or which would amount to a breach of faith in him towards the acceptor. If the liability of the surety be varied, it discharges him, or if he can sue the acceptor, in consequence of the resort over to him by the holder, notwithstanding the time given to, or the composition made with the acceptor, by the holder, the latter is enabled indirectly to violate his contract with the acceptor.¹³³ But receiving part of the debt from the acceptor, after the drawer has been duly fixed, works no prejudice to the holder’s right against the drawer or endorsers, for it is in aid of all parties who are eventually liable.

All that the rule requires, is, that the holder shall not so deal with the acceptor of the bill, or maker of the note, by giving time, or compounding, or giving credit, as to prejudice the right of the other parties to the bill, without their assent, in the exercise of their right of recourse against the maker or acceptor. The holder may give time to an immediate endorser, and proceed against the parties behind him. A prior party to a bill is not discharged by a release of a subsequent party. But the holder cannot reverse this order, and compound with prior parties without the consent of the subsequent ones, for it varies the rights of the subsequent parties, and discharges them. The parties to a bill are chargeable in different order. The acceptor is first. liable, and the endor, sers in the order in which they stand on the bill, and taking new security, or giving time, or discharging, or compounding with a subsequent endorser, cannot prejudice a prior endorser, because he has no rights against a subsequent endorsee.¹³⁴

If due notice of non-acceptance or non-payment be not given, yet a subsequent promise to pay, by the party entitled to notice, will amount to a waiver of the want of notice, provided the promise was made clearly and unequivocally, and with knowledge of the fact of a want of due diii,grence on the part of the holder.¹³⁵ So if the endorser has protected himself front loss by taking collateral security of the maker of the note, or an assignment of his property, it is a waiver of his legal right, to inquire proof of demand and notice.¹³⁶

If the endorser comes again into possession of the bill he is to be reguarded prima facie its the owner, and may sue and recover, though there be on it subsequent endorsements, and no receipt or endorsement back to him, and he may strike out the subsequent names.¹³⁷ To maintain a suit against the endorser, the holder must show, as we have seen, due demand of the maker or acceptor, or a presentment for acceptance, and due notice to him of the default; and he need not prove any prior endorsement, nor the hand of the drawer.¹³⁸ But in the suit against the acceptor., the holder need not show notice to any other person. The acceptor is liable at all events. Receiving part from the drawer or endorser is no discharge of the acceptor. Nothing short of the statute of limitations, or payment, or a release, or an express declaration of the holder, will discharge the acceptor.

He is bound, like the maker of a note, as a principal debtor. His acceptance is evidence that the value of the bill was in his bands, or had been received by him from the drawer. He is liable to the payee, to the drawer, and to every endorser. He is the first person, and the last person liable, and there is no difference in this respect between an acceptance given for accommodation, and one given for value. He is liable to an innocent holder, though the drawer’s hand be forged, and in the suit against him it is not necessary to prove any hand but that of the first endorser.¹³⁹ Though a bill, payable to a fictitious payee, be strictly void, yet if the fact was known to the acceptor, he may be sued by an innocent endorsee, equally as upon a note payable to bearer.¹⁴⁰ And if the holder of a bank bill cut it into two parts, for the sole purpose of transmitting it by mail with greater safety, this does not affect his rights upon the bill, and he may recover upon the production of only one of the parts, provided he shows that he is owner of the whole, and accounts for the absence of the other part. The parts of a divided bank bill are not separately negotiable.¹⁴¹

(8.) Of the measure of damages.

The engagement of the drawer and endorser of every bill is, that it shall be paid at the proper time and place, and if it be not, the holder is entitled to indemnity for the loss arising from this breach of contract. The general law merchant of Europe authorizes the holder of a protested bill immediately to redraw from the place where the bill was payable, on the drawer or endorser, in order to reimburse himself for the principal of the bill protested, the contingent expenses attending it, and the new exchange which he pays. His indemnity requires him to draw for such an amount as will make good the face of the bill, together with interest from the time it ought to have been paid, and the necessary charges of protest, postage, and broker’s commission, and the current rate of exchange at the place where the bill was to be demanded or payable, on the place where it was drawn or negotiated. The law does not insist upon an actual redrawing, but it enables the holder to recover what would be the price of another new bill, at the place where the bill was dishonored, or the loss on the re-exchange; and this it does by giving him the face of the protested bill, with interest, and the necessary expenses, including the amount or price of the re-exchange.¹⁴²

But in this country a different practice was introduced while we were English colonies, and it has continued to this day. Our usages on this subject form au exception to the commercial law of Europe.

In New York, the rule has uniformly been, to allow twenty percent damages on the return of foreign bills protested for non-acceptance or non-payment, and the damages were computed on the principal sum, with interest on the aggregate amount of the bill and damages, from the time that notice of the protest was duly given to the drawer or endorser. The mercantile usage was, to consider the twenty percent an indemnity for consequential damages, and to require the bill to be paid at the rate of exchange at the time of return, or a new bill to be furnished upon the same principles. But the Supreme Court¹⁴³ considered the twenty percent to be in lieu of damages in case of re-exchange, and the demand, with that allowance, was to be settled at the par of exchange. This doctrine was overturned by the Court of Errors,¹⁴⁴ and the holder was held to be entitled to recover, not only the twenty percent¹⁴⁵ damages, together with interest and charges, but also the amount of the bill liquidated by the rate of exchange or price of bills on England, or other place of demand in Europe, at the time of the return of the dishonored bill, and notice to the party to be charged; and this rule was subsequently followed in the courts of law.¹⁴⁶

The rate of damages on bills drawn and payable within the United States, or other parts of North America, was subsequently, in 1819, regulated in New York lay statute, and the damages fixed at five, or seven and an half, or ten percent, according to the distance or situation of the place on which the bill was drawn. But by the new revised statutes which went into operation on the 1st of January, 1830, the damages on all bills, foreign and inland, have been made the subject of a new regulation. They provide that upon bills drawn or negotiated within this state, upon any person, at any place within the states east of New York, or north of North Carolina, the damages to be allowed and paid, upon the usual protest for non-payment, shall be three percent upon the principal sum specified in the bill; and upon any person at any place within the states south of Virginia, five percent; and upon any person at any other place, in or adjacent to this continent, or in Europe, ten percent.

The damages are to be in lieu of interest, charges of protest, and all other charges incurred previous to and at the time of giving notice of non-payment. But the holder will be entitled to demand and. recover interest upon the aggregate amount of the principal sum specified in the bill, and the damages, from the time of notice of the protest and demand of payment. If the contents of the bill be expressed in the money of account of the United States, the amount due thereon, and the damages allowed for the non-payment, are to be ascertained and determined, without reference to the rate of exchange existing between this state and the place on which the bill is drawn. But if the contents of the trill be expressed in the money of account, or currency of any foreign country, then the amount due, exclusive of the damages, is to be ascertained and determined by the rate of exchange, or the value of such foreign currency, at the time of the demand of payment.

This new regulation confines the damages to bills protested for non-payment; and I infer, that no damages were intended to be allowed, because none are mentioned, on bills returned protested for non-acceptance. In every other respect, the claim on bills returned dishonored for non-acceptance, as to expenses, interest, and the rate of exchange, may, perhaps, be considered as governed by existing mercantile usage, until we have some judicial exposition of the law.

The laws and usages of the other states vary most essentially on the subject of damages on protested. bills. In some cases, the regulations of states approximate to each other, while in others they are widely different. In some cases the law or rule is unlike, bait the result is nearly similar; while between other states the result varies from four and a half to fifteen percent. In Massachusetts, the usage always has been to recover the amount of the protested bill at the par of exchange, and interest, as in England, from the time payment of the dishonored bill was demanded of the drawee, and the charges of the protest, and ten percent damages in lieu of the price of exchange.¹⁴⁷ But this rule has been changed, by statute, in 1826, and bills on Europe are now settled at the current rate of exchange and interest., and five percent damages; and if the bill be drawn upon any place beyond the Cape of Good Hope, twenty percent damages.

In Pennsylvania, the rule for a century past was twenty percent damages, in lieu of re-exchange; but by statute, in 1821, twenty percent damages were allowed upon protested bills on Europe, and twenty-five percent upon other foreign bills, in lieu of all charges, and the amount of the bill is to be ascertained and determined at the rate of exchange. In Maryland, the rule, by statute, is fifteen percent damages, and the amount of the bill ascertained at the current rate of exchange, or the rate requisite to purchase a good bill of the same time of payment upon the same place. In Virginia and North and South Carolina, the damages, by statute, are fifteen per. cent., and in Alabama and Louisiana, twenty percent. The damages in Georgia, by statute, in 1827, on foreign bills protested for non-payment, are ten percent, together with the usual expenses and interest, and the principal to be settled at the current rate of exchange.¹⁴⁸

The inconvenience of a want of uniformity in the rule of damage in the laws of the several states, is very great, and has been strongly felt. The mischiefs to commerce, and perplexity to our merchants, resulting from such discordant and shifting regulations have been ably, justly, and frequently urged upon the consideration of congress; and the right of congress to regulate, by some uniform rule, the rate and rule of recovery of damages upon protested foreign bills, or bills drawn in one state upon another, under the power in the constitution “to regulate commerce with foreign nations, and among the several states;” and the expediency of the exercise of that right; has been well and, I think, conclusively shown, in the official documents which have been prepared on that subject.¹⁴⁹

(9.) Of mercantile guaranties.

A guaranty, in its enlarged sense, is a promise to answer for the payment of some debt, or the performance of some duty, in the case of the failure of another person, who, in the first instance, is liable. As this engagement is a common one in mercantile transactions, and analogous, in many respects, to that of endorser of negotiable paper, a few remarks concerning its creation and validity will not be altogether inapplicable to the subject.

In Pillans v. Van Mierop,¹⁵⁰ it was held, that a note of guaranty, being in writing, and in a mercantile case, came within the reason’ of a bill or note, and did not require a consideration to appear upon the face of it. But there was a sufficient apparent consideration in that case, and the dicta of the judges were afterwards considered as erroneous in Rann v. Hughes, before the House of Lords.¹⁵¹ The doctrine in the latter case was, that all contracts, if merely in writing, and not specialties, were to be considered as parol contracts, and a consideration must be proved.

The English statute of frauds,¹⁵² which has been adopted throughout this country, requires, that, “upon any special promise to answer for the debt, default, or miscarriage of another person, the agreement, or some memorandum or note thereof, must be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized.” An agreement to become a guarantor, or surety, for another’s engagement, is within the statute; and if it be a guaranty for the subsisting debt, or engagement of another person, not only the engagement, but the consideration for it, must appear in the writing.

The word agreement, in the statute, includes the consideration for the promise, as well as the promise itself, and is an essential part of the agreement. This was the decision in the case of Wain v. Warlters;¹⁵³ and though that decision has been frequently questioued,¹⁵⁴ it has since received the decided approbation of the courts of law;¹⁵⁵ and the Ch. J. of the C. B. observed, that he should have so decided if he had never heard of the case of Wain v. Warlters. The English construction of the statute of frauds has been adopted in New York and South Carolina, and rejected in several other states.¹⁵⁶ The decisions have all turned upon the force of the word agreement; and where, by the statute, the word promise has been introduced, by requiring the promise or agreement to be in writing, as in Virginia, the construction has not been so strict.¹⁵⁷

Where the guaranty or promise, though collateral to the principal contract, is made at the same time with the principal contract, and becomes an essential ground of the credit given to the principal debtor, the whole is one original and entire transaction, and the consideration extends and sustains the promise of the principal debtor, and also of the guarantor. No other consideration need be shown than that for the original agreement, upon which the whole debt rested, and that may be shown by parol proof, as not being within the statute.¹⁵⁸ If, however, the guaranty be of a previously existing debt of another, a consideration is necessary to be shown, and that must appear in writing, as part of the collateral undertaking; for the consideration for the original debt will not attach to this subsequent promise; and to such a case the doctrine in Wain v. Warlters applies. But if the promise to pay the debt. of another arises out of some new and original consideration of benefit or harm moving between the newly contracted parties, it is then not a case within the statute.¹⁵⁹

There are no such words in the statute of frauds as original and collateral. The promise referred to is to answer for the debt or default of another. The term debt implies, that the liability of the principal had been precedently incurred; but a default may arise upon an executory contract, and a promise to pay for goods to be furnished to another, is a collateral promise to pay on the other’s default, provided the credit was, in the first instance, given solely to the other. If the whole credit be not given to the person who comes in to answer for another, his undertaking is collateral, and must be in writing.

After a valid guaranty has been made, the rights of the parties in the relative character of principal and surety affords an interesting subject of inquiry, but it is one that does not strictly appertain to the doctrine of negotiable paper;¹⁶⁰ and I shall conclude the present general sketch or outline of that subject, with some notice of the principal publications on bills and notes.

(10.) Of the principal treatises on bills and notes.

It would have been impossible to enter into greater detail of the distinctions and minute provisions which apply to negotiable paper, without giving undue proportion to this branch of these elementary disquisitions. ¹⁶¹ The treatises and leading cases must be thoroughly understood, before the student can expect to be master of this very technical branch of commercial law, and a brief notice of the best works on the subject will serve to direct his inquiries.

The earliest English work on bills is in Malynes’ Lex Mercatoria. The author was a merchant, and the work was compiled in the reign of King James I., and dedicated to the king. That part relating to bills of exchange is brief, loose, and scanty; but it contains the rules and mercantile usages then prevailing in England, and other commercial countries. It was required at that early day, that the bill should be presented for acceptance, and again for payment, with diligence, and at seasonable hours, and on proper days; and the default in each case was to be noted by a notary, and information of it sent to the drawer with all expedition, to enable him to secure himself. If the drawee would not accept, any other person was allowed to accept for the honor of the bill. Malynes takes no notice of promissory notes or checks, and he even laments that negotiable notes were unknown to the law of England.

The next English treatise on the subject was that by Marius, published in the year 1651, and that treatise has been referred to by Lord Holt and Lord Kenyon, as a very respectable work. Marius followed the business of a notary public at the royal exchange in London for twenty-four years, and he had, of course, perfect experience in all the mercantile usages of the times. His work is far more particular, formal, and exact, than that of Malynes. The three days of grace were then in use; and Marius decides the very point which has been again and again decided, and even in our own courts, that if the third day of grace falls on Sunday, or a holiday, or no day of business, the money must he demanded on the second day, and that the notice of the default of payment must he sent off by the very first post after the bill falls due. He says, likewise, that verbal acceptances were good, and that you may accept for part, and have the bill protested for the residue. It is quite amusing to perceive that many of the points which have been litigated, or stated in our courts, within the last thirty years, are to be found in Marius; so true it is, that case after case, and point after point, on all the branches of the law, are constantly arising in the courts of justice, and discussed as doubtful or new points, merely because those who raise them are not thorough masters of their profession. The next writer who treats on the subject of bills is Molloy. He was a barrister in the reign of Charles II.; and in his extensive compilation, de Jure Maritimo, which was first published in 1676, he casts a rapid glance over the law concerning bills of exchange; but that part of his work is far inferior to the treatise of Marius.

Beawe’s Lex Mercatoria Rediviva, is a much superior work to that of Malynes, and it appears, by its very title, to have been intended as a substitute. It contains a full, and very valuable collection, of the rules and usages of law on the subject of bills of exchange. Promissory notes were then taken notice of, though they had not been so much as alluded to in the formal and didactic treatise of Marius. They were not introduced into general use, until near the close of the reign of Charles It., and for this we have the authority of Lord Holt in Buller v. Crisp.¹⁶² Beawes is frequently cited in our books as an authority on mercantile customs; and a new and enlarged edition of his work was published by Mr. Chitty in 1813. The next work on the subject of bills and notes was by Cunningham, and it was published about the middle of the last century. It consisted chiefly of a compilation of adjudged cases, without much method and observation. It was mentioned by the English judges as a very good book; but it fell into perfect oblivion as soon as Kyd’s treatise on bills and notes appeared, in the year 1790.

Mr. Kyd made free use of Marius and Beawes, and he ingrafted into his work the substance of all the judicial decisions down to that time. His work became, therefore, a very valuable digest to the practicing lawyer, and particularly as during the times of Lord Holt and Lord Mansfield, the law concerning negotiable paper was extensively discussed, and vastly improved. Mr. Bayley, who is now a judge of the K. B., published in 1789, a little before the work of Kyd, a small manual or digest of the principles which govern the negotiability of bills and notes. As a collection of rules expresses’ with sententious brevity and perfect precision, it is admirable. In a subsequent edition, he stated also the cases from which his principles were deduced. A work of wore full detail, and of a more scientific cast, seemed to be still wanting on the subject, and that was well supplied by Mr. Chitty’s treatise on bills, notes and checks, first published in 1799. He had recourse, though in a snaring degree, to the treatise of Pothier for illustration of the rules of this part of the general law merchant; and it is obvious, that a more free and liberal spirit of inquiry distinguishes the professional treatises of the present age from those of former periods. The works of Park and Marshall on Insurance, and Abbott on Shipping, and Chitty on Bills, and Jones on bailment, have all been enriched by the profound and classical productions of France and Italy on commercial jurisprudence.

The treatise of Pothier on Bills is finished with the same order and justness of proportion, the same comprehensiveness of plan, and clearness of analysis, which distinguish his other treatises on contracts. His work is essentially a commentary upon the French ordinance of 1673; and he had ample materials in the commentary of M. Jonsse, and in the treatises on the same subject by Dupuy de la Serra, and by Savary, to which he frequently refers. He also cites two foreign works of learning on the doctrine of negotiable paper, and those are Scacchia De Commerciis et Cambio, and Heineccius’s treatise, entitled Elementa Juris Cambialis. The latter work contains very full and satisfactory evidence of the professional erudition of the Germans on subjects of maritime law. He refers to the ordinances of various German states, and of several of the Hanse Towns relating to commercial paper, and he cites eight or ten professed German treatises on bills of exchange.¹⁶³

It has been a frequent practice on the European continent, to reduce the law concerning bills as well as concerning other maritime subjects, into system by ordinance. The commercial ordinance of France in 1673, digested the law of bills of exchange, and it was, with some alterations and amendments, incorporated into the commercial code of 1807. Since the publication of the new code, M. Pardessus has written a valuable commentary on this, as well as on other parts of the code; and there is a clear and concise summary of the law concerning negotiable paper in M. le Comte Merlin’s Repertoire de Jurisprudence, under the title of Lettre et Billet de Change. Thomson’s treatise on the law of bills and notes in Scotland, is a superior work, and spoken of in very high terms by persons entirely competent to judge of its value; I allude to the reference to that treatise by Mr. Bell, in his commentaries, and by Mr. Justice Bayley, in one of his recent opinions in the King’s Bench. The law concerning negotiable paper has now become a science, which can be studied with infinite advantage in the various codes, treatises, and judicial decisions; for, in them, every possible view of the doctrine, in all its branches, has been considered, its rules established, and its limitations accurately defined.