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bonds of a foreign government to be subsequently issued,1 Egyptian and colonial bonds,2 bonds of a foreign bank, bonds of foreign and colonial railway companies.*

In Crouch v. Crédit Foncier 5 the Court distinguished between foreign securities and those made in this country, holding that a debenture made by an English company in England payable to bearer was not by law negotiable, that it would have been incompetent to stipulate that it should be negotiable, and therefore that it could not be negotiable by custom. But in Goodwin v. Robarts this judgment was disapproved. "We think it unnecessary to enter upon the question whether the contract thus entered into is to be considered as a Russian or an English contract, as we agree in thinking that its negotiable character, if it exists at all, must depend not on what might be its negotiability by the foreign law, but on how far the universal usage of the monetary world has given it that character here."7 The judgment then proceeds to show that negotiable instruments have not at any time been a fixed class, but that the Courts, in deciding what instruments are negotiable, have followed the custom of merchants. This ground of judgment was approved in the House of Lords, though there the judgment was laid also on personal bar. In Rumball v. Metropolitan Bank 9 it was held, on the authority of Goodwin v. Robarts, that scrip for shares of the Anglo-Egyptian Bank was negotiable; and it has since been held, expressly on the ground that Crouch v. Crédit Foncier has been overruled by Goodwin v. Robarts, that debentures of an English company, which, though not promissory notes, are payable to bearer and are treated as negotiable, are in law negotiable.10

1 Goodwin v. Robarts, 1875, L.R. 10 Ex. 76, 337, affd. 1876, 1 A.C. 476.

2 London and County Bank v. London and River Plate Bank, 1887, 20 Q.B.D. 232, affd. 1888, 21 Q.B.D. 535.

3 London Joint Stock Bank v. Simmons [1891], 1 Ch. 270; rev. [1892], A.C. 201.

4 Venables v. Baring Brothers [1892], 3 Ch. 527; Bentinck v. Lon

don Joint Stock Bank [1893], 2 Ch.
120; Sheffield v. London Joint Stock
Bank, 1888, 13 A.C. 333.

5 1873, L. R. 8 Q.B. 374.
6 Cit.

7 10 Ex. 345.

8

1 A.C. 476.

9 1877, 2 Q.B.D. 194.

10 Bechuanaland Exploration Company v. London Trading Bank [1898], 2 Q.B. 658; Edelstein v. Schuler and Co. [1902], 2 K.B. 144.

In several actions at the instance of holders of debentures payable to bearer against the companies issuing them, the opinion was expressed that the documents in question might be promissory notes, but the cases were decided on the ground that, whatever the precise nature of the documents might be, the companies were bound by the form of their undertaking not to set up against a bona fide holder for value collateral defences competent to them against the original holder.1 The doctrine of personal bar has also been applied in cases between a bona fide holder and the true owner.2

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The principle of Goodwin v. Robarts has been applied only to documents entitling the bearer to payment of money, and has been said to follow from the nature of the property to which these instruments give right. Documents of title to goods are not negotiable. The transfer of a bill of lading by or on behalf of the owner thereof transfers the property of the goods to which it refers.5 The transfer of a document of title other than a bill of lading does not transfer the property of the goods, unless it is followed by intimation to the custodier of them. This rule is not affected by the Factors Acts.6 The personal title which is conferred on the transferee by delivery to him of a document of title, was at one time held not to defeat the original vendor's right of stoppage in transitu or of retention for the price or for a general balance. Latterly there was a tendency even at common law to hold, in regard at first to documents of title which expressly promised delivery of the goods to the bearer, and then to those in favour of an individual and his assignees, that the transferee's right defeated any claim against

1 Blakely Ordnance Co., 1867, L.R. 3 Ch. 154; General Estates Co., 1868, L.R. 3 Ch. 758; Imperial Land Co. of Marseilles, 1870, L.R. 11 Eq. 478.

2 Goodwin v. Robarts, cit.; Rumball v. Metropolitan Bank, cit.

3 Wookey v. Pole, 1820, 4 B. & Ald. 1, 10, 11; Goodwin v. Robarts, cit. 10 Ex. 351.

4 52 and 53 Vict. c. 45, s. 1 (4). 5 Barber v. Meyerstein, 1870, L.R. 4, H.L. 317; M'Ewan v. Smith, 1847, 9 D. 434, affd. 1849, 6 Bell's

App. 340; Balfour v. Laing, 1852,

1 Stuart, 542; Bell's Prin. 418 A.

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8

Inglis v. Robertson and Baxter, 1897, 24 R. 758, affd. 1898, 25 R. [H.L.] 70; Connal and Co. v. Loder, 1868, 6 M. 1095.

7 M'Ewan v. Smith, cit.; Melrose v. Hastie, 1851, 13 D. 880.

8 Dixon v. Bovill, 1854, 16 D. 619, ratio altered 1856, 3 Macq. 1; Dimmack v. Dixon, 1856, 18 D. 428.

9 Pochin and Co. v. Robinows and Marjoribanks, 1869, 7 M. 622; Vickers v. Hertz, 1871, 9 M. (H.L.) 65;

the goods by the granter of the document or a prior transferor. But the principle of these decisions, as of the Factors Acts, is not negotiability, but personal bar. Under the Factors Acts, 1889 and 1890, and the Sale of Goods Act, 1893, the transfer of a document of title by a mercantile agent,1 a vendor, or a vendee, in possession of the document, is as valid and has the same effect as if it had been made under the express authority of the principal, the vendee, or the vendor respectively.2 The transfer of a document of title by a person to whom it has been lawfully transferred as buyer or owner of the goods, has the effect, if it is by way of sale, of defeating the unpaid seller's right of retention or of stoppage in transitu, and if it is by way of pledge, of making the transferee's right preferable to that of the unpaid seller.3 But subject to these provisions, all of which relate to the transfer of a document of title by a person in possession of it with the consent of the owner of the goods, the transferee of any document of title, even a bill of lading, obtains no better title. to the goods thereby represented than his author had. "The purchaser must accept the risk of his vendor having found or stolen the goods or documents, or otherwise got possession of them without the consent of the owner." 5 The Factors Act, 1889, provides for documents transferable by delivery, that is, documents in favour of the bearer. This provision appears to be inconsistent with the judgment of the House of Lords in Dixon v. Bovill as regards the competency of such instruments; but it does not affect the rule that they are not negotiable.

Documents representing shares the title to which can be completed only by registration, are not negotiable. Postoffice orders also, and letters of credit, are not negotiable."

Bell's Prin. 1305; see also Merchant
Banking Co. of London v. Phoenix
Bessemer Steel Co., 1877, 5 Ch. D.
205; Benjamin on Sales, 838.

1 52 and 53 Vict. c. 45, s. 1 (1).
2 52 and 53 Vict. c. 45, ss. 2 (1),
8, 9; 53 and 54 Vict. c. 40; 56 and
57 Vict. c. 71, s. 25.

3 52 and 53 Vict. c. 45, s. 10; 56 and 57 Vict. c. 71, s. 47.

4 Cahn v. Pockett's Bristol Channel Steam Packet Company [1899] 1 Q.B.

643; Bell's Prin. 419 (b); Benjamin
on Sale, 891; 1 Smith's L.C. 759.

5 Cahn v. Pockett's Co., cit. 658.
6 52 and 53 Vict. c. 45, s. 1 (4).
7 Cit.

8 London and County Bank v. London and River Plate Bank, 1887, 20 Q.B.D. 232; Colonial Bank v. Cady, 1888, 38 Ch. D. 388, 1890, 15 A.C. 267.

9 Fine Art Society v. Union Bank of London, 1886, 17 Q.B.D. 705.

II. LETTERS OF CREDIT.

"A letter of credit is a mandate authorising the person addressed to pay money, or furnish goods, to another, on the credit of the writer."1 "It is called a general letter of credit when it is addressed to all merchants, or other persons in general, requesting such advance to a third person; and it is called a special letter of credit when it is addressed to a particular person by name, requesting him to make such advance to a third person."2 A general letter of credit is usually addressed to the person in whose favour it is conceived, authorising him to draw upon the writer.3 A marginal letter of credit is one which authorises only the drawing of a particular draft, on the margin of which it is written.1 A documentary letter of credit is one which stipulates that drafts to be drawn under it shall be accompanied by bills of lading or shipping documents. Unconditional letters of credit are known as open credits.5 Circular letters are letters of credit adapted to the needs of travellers. They are addressed to various foreign correspondents of the banker by whom they are granted, and are accompanied by a letter of indication, which contains a list of the correspondents addressed and the signature of the holder for comparison with his signature on drafts presented to the correspondents."

The writer or granter of a letter of credit undertakes,

1 Bell's Prin. 279; see also 1 Bell's Com. 389; Story on Bills, ss. 459-463. 2 Story on Bills, s. 459.

3 See Story on Bills, s. 462; Orr and Barber v. Union Bank of Scotland, 1852, 14 D. 395; rev. 1854, 1 Macq. 513; Agra Bank ex parte Tondeur, 1867, L.R. 5 Eq. 160special; Prehn v. Royal Bank of Liverpool, 1870, L. R. 5 Ex. 92; Agra Bank ex parte Asiatic Corporation, 1867, L.R. 2 Ch. 391-general; see forms, p. 282 infra.

4 See Maitland v. Chartered Mercantile Bank of India, London, and China, 1869, 38 L.J. Ch. 363; form p. 282, infra.

5 See Maitland v. Chartered Mercantile Bank of India, London, and China, cit.; Chartered Bank of India, Australia, and China, v. Macfadyen, 1895, 64 L.J. Q.B. 367.

6

See Conflans Quarry Co. v. Parker, 1867, L.R. 3 C.P. 1.

if the letter is general, that he will pay drafts drawn in accordance with it, and if it is special, that such drafts shall be paid by the addressee. If this obligation is not implemented, he becomes liable to the person at whose instance the letter is granted,1 and also, it may be, to the person in whose favour it is granted,2 to repay the consideration paid for the letter together with any damage occasioned by the breach of contract.

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Campbell, in consideration of a money payment, procured a letter of credit from the Union Bank of Scotland addressed to the Manchester and Liverpool Bank, authorising them to honour Orr and Barber's drafts up to a certain sum. clerk in Orr and Barber's employment, by means of the letter of credit and a cheque forged by him in their name, obtained payment of that sum from the Manchester and Liverpool Bank, and absconded. In an action at the instance of Campbell and Orr and Barber it was found that the Union Bank was liable to repay the amount of the credit, unless it could be shown that in the circumstances "the payment on the forged cheque was a valid discharge to the Liverpool Bank as between themselves and Orr and Barber." 3

The British Linen Company, at the request of the Caledonian Insurance Company, addressed a letter of credit to their agent at Irvine, requesting him to honour the drafts of Andrew King, a person with whom the insurance company supposed that they had effected a contract of insurance. In point of fact the whole transaction was a fraud concocted by a man named Harvie; and though there was a man named King living in Irvine at the time, he knew nothing of the matter. Harvie indorsed the name "Andrew King" on the letter, and presented it to the bank's agent at Irvine, who paid it. The bank was subsequently found liable in repayment to the company on the principles laid down in Orr &

1 Orr and Barber v. Union Bank of Scotland, 1852, 14 D. 395, rev. 1854, 1 Macq. 513; British Linen Co. v. Caledonian Insurance Co. 1859, 21 D. 1197, affd. 1861, 4 Macq. 107; Prehn v. Royal Bank of Liverpool, 1870, L.R. 5 Ex. 92.

2 Orr and Barber v. Union Bank of Scotland, cit. per L.C. 1 Macq. 524, per Lord Medwyn, 14 D. 412, cf. per L.J.C. 407.

3 Orr and Barber v. Union Bank of Scotland, cit.

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