Carmichael v. Pennsylvania Bank.. 188 Gordon v. Rundlett

.83, 133 Hall v. Howard

INTRODUCTION

TO THE

LAW OF BILLS OF EXCHANGE.

exchange.

The little document, known under the names of a "Bill A bill of of Exchange," or a "Promissory Note," whether issued by a banker as a draft or a bank note, or by merchants and others, as a credit security, and which, cosmopolitan in its nationality, has permeated the commerce of the world, and gathered around it a code of universal mercantile law, has been thus described: "A bill of exchange is commonly drawn on a small piece of paper and comprised in two or three lines, and is so noble and excellent, that it is beyond or exceeding any specialty or bond in its punctuality and precise payment; for if once accepted, it must be paid when due, otherwise the acceptor loses his credit."1

bills and

The negotiable securities called bills of exchange, pro- Qualities of missory notes, bank notes, cheques, and other paper-money notes. securities which partake of their characteristics, are the only species of contract, technically classed by the law under the title of choses in action, which ordinarily carry with them, by transfer, a clear and indefeasable title. They may be said to possess three qualities or characteristics, which distinguish them from all other contracts or chattel rights in property of the species known as choses in action.

able in title.

1. The title. If any chattel, which can be identified, is 1. Indefeasstolen from its owner, no purchaser, however innocent or ignorant of the theft, can acquire a title to it against the

1 Beawes, Lex Mercatoria 561.

2. Certain in amount

3. True in consideration.

true owner. And such owner can claim it at any time, and at any place, if he is able satisfactorily to identify it and establish his original ownership. But if a negotiable. bill or note, drawn or indorsed so as to be payable to bearer, be stolen, and transferred by the thief to a third person who is innocent and ignorant of the theft, and who gives value for it to the thief, such person becomes, by his chase, a bona fide holder for value without notice. He is, as the new Act designates him, "a holder in due course,' and acquires an absolute and indefeasable title to the bill or note, and can claim the payment of it from all the prior parties, who may be legally liable to him according to their several contracts.

pur

2. The amount. If a bond, or other chose in action, is transferred to a bona fide holder, it carries with it all its equities and defects of title; and the assignee or holder steps into the shoes of his assignor, and is subject to the contingency of its amount being reduced by set-off or counter-claim, or agreements qualifying its value, between the original parties. No transfer by a thief can give a title to it, or in any way defeat the right or title of the original holder, or any successive holders, of such bond or chose in action. But a bill or note guarantees the right to the whole amount secured by its face, and is subject to no deduction or set-off, at the instance of the original or intervening parties, in the hands of a holder in due course, who has bona fide acquired it for value before maturity. It is like a bank note, a circulating instrument of credit, and part of the commercial currency of the country, and has all the rights of negotiability which, for the public interest and convenience, attach to an ordinary bank note.

3. The consideration. By the usage of merchants, the value stated on a bill or note, is the true consideration, and is conclusively presumed by law to be so; and in the hands of a holder in due course, no evidence is allowable that, at