of the same date and tenor remaining unpaid)." 51 A cancellation or payment of any one of the parts extinguishes all the rest.52 The rights and liabilities of holders and acceptors of bills in a set will be considered hereafter.53

C. PROMISSORY NOTES.

9. Definition of promissory note.

54

A promissory note is an unconditional promise in writing, made by one person to another, signed by the maker engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person, or to bearer. A negotiable promissory note is payable to the order of a specified person or to the bearer. No precise form of words is necessary to constitute a valid promissory note, provided all statutory requirements are complied with.55 It has been held that an instrument containing a promise to do anything more than to pay a certain sum of money at a certain time, and at all events, is not a promissory note, but a special agreement.56

51. Story on § 28. 52. Neg. Inst. L. (N. Y.), § 315. See Appendix, post.

Bills of Exchange, a certain sum of money at a time

53. See chap. XII, §§ 138-140, post. 54. See Byles on Bills (16th ed.), p. 6.

specified therein. Drake v. Markle, 21 Ind. 433, 83 Am. Dec. 358; Brown v. First Nat. Bank, 115 Ind. 572, 18 N. E. 56; Maryland Fertilizing & Mfg. Co. v. Newman, 60 Md. 584, 45 Am. Rep. 750; Cayuga County Nat. Bank v. Purdy, 56 Mich. 6, 22 N. W. 93.

The Negotiable Instruments Law defines a negotiable promissory note The following cases may also be cited within the meaning of that act as an as containing definitions of a promisunconditional promise in writing sory note: Walters v. Short, 10 Ill. made by one person to another, signed 252; Coolidge v. Ruggles, 15 Mass. by the maker engaging to pay on de- 387; Carnwright v. Gray, 127 N. Y. 92, mand, or at a fixed or determinable 27 N. E. 835, 24 Am. St. Rep. 424, 12 future time, a sum certain in money to L. R. A. 845. order or to bearer." And under this 55. Hooper v. Williams, 2 Exch. 20; act, "where a note is drawn to the Peto v. Reynolds, 9 Exch. 410, affd. in maker's own order, it is not complete 11 Exch. 418; Pepoon v. Stagg, 1 Nott until indorsed by him." Neg. Inst. & McC. (S. C.) 102; Woodlock v. LesL. (N. Y.), § 320. See Appendix. lie, 2 Nott & McC. (S. C.) 585; HitchThe definition in the text is that cock v. Cloutier, 7 Vt. 22. See also contained in the English Bills of Ex- Hunt v. Devine, 37 Ill. 137, in which change Act of 1882, § 83. It is more the court held that any form of exappropriate to our purposes because it pression containing an absolute promdefines promissory notes without re- ise to pay a certain amount at a time gard to their negotiability. certain constitutes a promissory not.

56. Lane v. Gobbold, Fed. Cas. No.

A promissory note has also been defined as a written engagement by one 8,051; Austin v. Burns, 16 Barb. (N. person to pay another person, therein Y.) 643; Barnes v. Gorman, 9 Rich. named, absolutely and unconditionally, Law (S. C.), 297.

57

10. Negotiability of promissory note. A promissory note is not essentially negotiable, although under the Negotiable Instruments Law it must have this characteristic in order to be subject to the provisions of that statute.58 Although negotiability is not essential to the validity of a promissory note, "it is this quality which gives it its principal importance, and makes it a circulating credit, so extensively used and so generally resorted to in the commerce of the world." 59 The requirements of a negotiable instrument will be considered hereafter. 60

11. Development and early use of promissory notes.

a. Origin and development. It seems likely that, as long as money has been in use and men have expressed themselves in writing, simple promissory notes, or written promises to pay money, have been used for the purpose of promoting trade and commercial transactions.61 The Roman law mentions such promises,62 and there is no reason to believe that they were not used by the even more ancient nations. The negotiability of these instruments was unknown among the Romans and is evidently the development of modern times. It is difficult to definitely state when promissory notes first came into use as negotiable instruments. They were evidently known and used on the continent long before they became common in England. The time of their introduction into England can only be conjectured; it has been stated that they appear to have been introduced therein, about thirty years (1670) before the reign of Queen Anne.63 However

57. Alabama.- Bowie V. Minor (Ala.), 264.

Foster, Georgia.— Reed v. Murphy, 1 Ga.

236.

403; Kimball v. Huntington, 10 Wend. (N. Y.) 675, 25 Am. Dec. 590; Carnwright v. Gray, 127 N. Y. 92, 27 N. E. 835, 24 Am. St. Rep. 424, 12 L. R. A.

Maine.- Bates v. Butler, 46 Me. 845.

387.

Maryland.- Duncan

V. Maryland Sav. Inst., 10 Gill & J. (Md.) 299. Massachusetts.- Sibley v. Phelps, 6 Cush. (Mass.) 172.

Missouri.-Finney v. Shirley, 7 Mo. 42; McGowen v. West, 7 Mo. 569, 38 Am. Dec. 468; Brady v. Chandler, 31 Mo. 28.

New York.- Downing v. Backenstoes, 3 Caines (N. Y.), 137; Goshen & M. Turnpike Co. v. Hurtin, 9 Johns. (N. Y.) 217, 6 Am. Dec. 273; Seymour v. Van Slyck, 8 Wend. (N. Y.)

Pennsylvania.- Withers v. Deane, 21 Leg. Int. (Pa.) 300.

Tennessee.- Cummings v. Freeman, 22 Humph. (Tenn.) 143.

Vermont.-Arnold v. Sprague, 34 Vt. 402.

58. Neg. Inst. Law (N. Y.), § 320. 59. Story on Promissory Notes (7th ed.), p. 4.

60. See chap. III, post.

61. 1 Parsons on Bills and Notes, p. 9. 62. Dig. Liber 22, tit. 1, L. 41, s. 2. 63. Kyd on Bills, p. 18, where it is As commerce advanced in its

said:

66

this may be, it is certain that such notes were within the custom of merchants for a long time prior to the time when they became the subject of litigation or legislation. Malynes, in his work on Lex Mercatoria, first published in 1622, describes promissory notes, calling them bills obligatory or bills of debt.** In speaking of these bills, he says: "The sincerity of plain dealing hath been hitherto inviolable in the making of said bills, which every man. of credit and reputation giveth of his own handwriting, or made by his servant, and subscribed by him, without any seal or witness thereto; and is made payable to such a merchant or person, or to the bearer of the bill, at such times of payment as is agreed." It cannot be doubted but that the antiquity of promissory notes is as great as that of inland bills of exchange; and indeed it would seem that the foreign custom of merchants respecting promissory notes was gradually and imperceptibly engrafted into the English law merchant at the same time, and under the same sanction as inland bills.65 No distinction seems to have been made in the

is for commodities received of him to my content; which sum of £500 as aforesaid, I do hereby promise to pay unto the said C. D. (or the bringer hereof) within six months after the date of these presents. In witness whereof, I have subscribed the same at

progress, the multiplicity of its con- current money, for merchandise, which cerns required, in many instances, a less complicated mode of payment than by bills of exchange. A trader, whose situation and circumstances rendered credit from the merchant or manufacturer who supplied him with goods, absolutely necessary, might have so limited a connection with the com- Amsterdam, this day of July, mercial world at large, that he could not easily furnish his creditor with a bill of exchange on another man; but his own responsibility might be such, that his simple promise to pay, reduced to writing for the purpose of evidence, might be accepted with equal confidence as a bill on another trader; 65. Inland bills and promissory hence, it may reasonably be con- notes "both came into use at the same jectured, were at first introduced; and time, were of equal benefit to comthe period of their introduction appears to have been about thirty years before the reign of Queen Anne."

This is nothing more than a verbose promissory note, which stripped of its redundancies is simply this: For value received, I promise to pay to C. D., or bearer, £500, in six months after date. See Appendix, 1 Cranch (U. S.), 386.

merce, depended upon the same principles, and were supported by the same law." Appendix, 1 Cranch (U. S.), 386.

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64. Bills obligatory, bills of debt.Promissory notes were called bills ob- Comyns (Lord Chief Baron), in his ligatory, or bills of debt, and are Digest, under the title "Merchant," in described with great accuracy by abridging the substance of what Malynes in his Lex Mercatoria, pp. 71, Malynes had said upon the subject of 72 et seq., where he gives the form of bills of debt, or bills obligatory, stated such a bill, which will be found in sub- the law as follows: Payment by a stance exactly like a modern promis- merchant shall be made in money or sory note. "I, A. B., merchant of by bill. Payment by bill is by bill of Amsterdam, do by these presents, ac- debt, bill of credit, or bill of exchange. knowledge to be indebted to the honest A bill of debt, or bill obligatory, is, C. D., English merchant, dwelling at when a merchant by his writing acMiddleborough, in the sum of £500, knowledges himself in debt to another

earlier cases between inland bills of exchange and promissory notes. 66 68 As a result we find considerable confusion existing as to the origin of the legal principles involving the rights and obligations of the parties to promissory notes.

b. Statute of 3 & 4 Anne, chap. 9.- The continued and obstinate refusal of some of the common-law judges to accord to promissory notes, made payable to order or to bearer, the element of negotiability, and to permit them to be assigned and indorsed, led to the enactment of the statute of 3 & 4 Anne, chap. 9, which expressly and specifically conferred upon such notes the same quality of assignability and negotiability as was possessed by inland bills of exchange.67 Lord Chief Justice Holt was the most obstinate of all these judges. He appears to have been most vehement in his opposition and to have persistently contended against the recognition by the courts of the assignability of promis

sory notes, or inland bills of exchange; for the reporters do not express themselves with sufficient precision, but use the words "note" and "bill" promiscuously."

in such a sum, to be paid at such a day, and subscribes it at a day and place certain. Sometimes a seal is put to it. But such bill binds by the custom of merchants, without seal, witness or delivery. So it may be made 67. Statute of 3 & 4 Anne, chap. 9, payable to bearer and upon demand. provided as follows: "All notes made So it is sufficient if it be made and and signed by any person or persons, subscribed by the merchant's servant. whereby such person or persons shall So a bill of debt may be assigned to promise to pay to any other person, another toties quoties." And he then his, her, or their order, or to bearer, quotes at length the statute of Anne, any sum of money mentioned in such hereafter cited. Lord Comyns was note, shall be taken and construed to either at the bar or on the bench dur- be, by virtue thereof, due and payable ing the reigns of William, Anne, and to any such person or persons to whom George I and George II, and must the same is made payable; and also, have known how the law stood before every such note shall be assignable or the statute referred to, and it can be readily inferred that in his opinion the statute was enacted to confirm as law the custom of merchants in vogue prior to that time.

indorsable over in the same manner as inland bills of exchange, and the is by such note made payable, may person or persons to whom such sum

maintain an action for the same in the inland bill of exchange, made or drawn same manner as they might do on an according to the custom of merchants, against the person or persons who

dorsed

66. Confusion in reports of early cases. There was apparently no distinction made, either by the bench, by the bar, or by merchants, between a promissory note and an inland bill, and this is the cause of that obscurity signed the same; and any person or in the reports of mercantile cases dur- persons to whom such note is ining the reigns of Charles II, James II, or assigned, or the money and William III, of which Lord Mans- therein mentioned ordered to be paid field complained so much in the case by indorsement thereon, may maintain of Grant and Vaughn, 3 Burr. 1525, an action for such sum of money, and 1 W. Bl. 488, where he says that either against the person or persons in all cases in King William's time who signed such note, or against any "there is great confusion; for, with- of the persons who indorsed the same, out searching the record, one cannot in like manner as in cases of inland tell whether they arose from promis- bills of exchange."

68

sory notes. In one case he says: "The notes in question are only an invention of the Goldsmiths in Lombard street, who had a mind to make a law to bind all those that did deal with them; and sure to allow such a note to carry any lien with it were to turn a piece of paper, which is in law but evidence of a parol contract, into a specialty; and besides, it would impower one to assign that to another which he could not have himself; for since he to whom this note was made could not have this action, how can his assignee have it?" 69 It seems certain that the statute in question was the direct result of the pertinacious refusal of Lord Holt to yield to the custom of merchants in vogue as to the assignability of promissory notes. The preamble of a statute infers this,70 and there is a considerable of contemporary testimony to the same effect."1 It is apparent that Parliament recognized the injustice of Lord Holt's views, and deemed it important for the interests of commerce and business transactions that the true status of promissory notes, as already established by the custom of merchants, should become fixed, in fact, as a part of the law of the land.72

29.

68. Buller v. Crips, 6 Mod. (Eng.)

of

therein, are not assignable or indorsable over, within the custom of mer69. In the case of Clerk v. Martin, 1 chants, to any other person; and that Salk. (Eng.) 129, also reported by Lord such person to whom the sum Raymond in 2 Ld. Raym. 757 (decided money mentioned in such note is payin 1702), Chief Justice Holt also said: able, cannot maintain an action by the "That the maintaining of these ac- custom of merchants against the pertions upon such notes were innovations son who first made and signed the upon the rules of the common law; same; and that any person to whom and that it amounted to a new sort of such note should be assigned, indorsed specialty unknown to the common law, or made payable, could not, within the and invented in Lombard Street, which said custom of merchants, maintain attempted in these matters of bills of any action upon such note against the exchange to give laws to Westminster person who first drew and signed the Hall. That the continuing to declare same: Therefore, to the intent to enupon these notes upon the custom of courage trade and commerce, which merchants proceeded upon obstinacy will be much advanced, if such notes and opinionativeness, since he had al- shall have the same effect as inland ways expressed his opinion against bills of exchange, and shall be negothem, and since there was so easy a tiated in like manner." method as to declare upon a general indebitatus assumpsit for money lent." See also Williams v. Cutting, 2 Ld. Raym. 825, 7 Mod. 154, and Bouton v. Souter, 2 Ld. Raym. 774, in both of which cases similar sentiments were expressed by Chief Justice Holt.

71. Lord Hardwicke in Walmsley v. Child, 1 Ves. 346 (1749).

72. Mr. F. A. Greer says, in his valuable article on "Custom in the Common Law," 9 Law Quar. Rev. 169: "The only permanent result of Holt's opposition was that Parliament was 70. The preamble of 3 & 4 Anne, constrained to do what the judges, chap. is as follows: "Whereas it through his influence, declined to do. has been held, that notes in writing, Holt was a great lawyer, but his petusigned by the party who makes the lant opposition to actions on promissame, whereby such party promises to sory notes is not to be reckoned among pay unto any other person, or his or- the acts that constitute his title to a der, any sum of money mentioned great reputation. His view was con