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be this, that the common law has been expanding and taking on ideas which might perhaps have been sufficient for law merchant had they existed early enough. But that does not lead to the conclusion that the common law is to be considered as the source to be drawn upon in settling questions of the law merchant. It does not show that the law merchant is not a distinct branch of law, sufficient unto itself. The custom of mer. chants is still the custom of merchants, though men may, by estoppel in other things, bring about like results. Nullum simile est idem.'

The point to be insisted upon is the right of the custom to govern itself, and to be treated as governing itself, however closely something else may resemble it. It is the

Right of the right of business to make its own laws, and to be custom to gove looked to directly as doing so. Custom made law

ern itself. merchant, and it is to little purpose to say that the common law has found out another way to like results; or rather it is misleading to say so, for it is putting one on the wrong scent.


• Law' then should follow business'; ? it should not divert or anticipate the course of business, except for most urgent rea

Certain portions of the Negotiable Instru- Law should folments Law may accordingly be criticised. The

The low business : Statute does not always follow business. Thus the Statute. Statute has an article on acceptance, and another on payment, of bills of exchange for honor ; but there is nothing like a custom in this country, such as prevails in England, to accept or pay bills for honor. What custom may do or seek to do may not be foreseen; the Statute may embarrass the course of business here. Freedom of contract is the clear note of sound political economy, and should therefore have its course.

the recent

1 In these words the author quotes a serious remark made to him by the late Lord Bowen, in a conversation concerning the decision of the Court of Appeal in the great case of the Mogul Steamship Co. v. McGregor, 23 Q. B. D. 612 (affirmed, 1892, A. C. 25), in which his lordship (then Lord Justice Bowen) had just delivered his well-known opinion. The words quoted, it is confidently believed, contain the very substance of sound legal theory.

? Articles xiv., xv.


Law merchant, in regard to bills, notes, and cheques, is a particular law of consideration, grace, and negotiability.

A special doctrine of consideration, differing in manifestation from that of the common law, arose in the very outset, by reaPeculiar doc

son of the fiction before referred to. Consideration trine of con- was stated in the fiction, and (the allegation not sideration : production of being traversable) therefore did not require proof. instrument.

In later times the fiction was dropped, and the allegation simply ran, that the defendant became liable by the custom of merchants. That allegation in turn was dropped, and a short statement of consideration finally took its place, where it has remained.1

The net result has been that the production of the instrument raises, against any party to it, whether maker, drawer, acceptor, or indorser, at least where the instrument is negotiable, a presumption that his undertaking is supported by a valuable consideration.8 In other words, the general presumption of liability which prevailed under the custom before its matriculation into law, has been converted into the narrower presumption of consideration of the present day.

How this differs from the rule of the common law in regard to simple contract in writing is plain. By the common law the plaintiff in such a case is bound to give some actual evidence of consideration; production of the writing is not enough, unless

1 On the history of this branch of the subject see Dunlop v. Silver, Cases, 6-11, and the cases and notes in Professor Ames's Cases on Bills and Notes, ii. 520–538. On the difficulties of suing in debt see Milton's Case, Ames, ii. 520; Bishop v. Young, id. 532.

2 As to non-negotiable instruments there is a conflict of authority. See Bigelow's L. C. Bills and Notes, 23; and among other cases Carnwright v. Gray, 127 N. Y. 92, in favor of the presumption, and Sidle v. Anderson, 45 Penn. St. 464, contra. The Statute relates only to negotiable instruments.

3 N. I. L. & 31. The plaintiff does not lose the benefit of the presumption by offering evidence to show consideration. Durland v. Durland, 153 N. Y. 67. Partial failure of consideration between immediate and like parties may be shown, at least by statute. Burgess v. Nash, 66 Vt. 44; Hoyt v. McNally, id. 48.

its language itself shows what is required. But as regards the very nature of consideration there is no difference between the law merchant and the common law; the common law doctrine has been fully fixed upon the law merchant in this respect.

arose: abol.

Grace is a short period of time extended by the unwritten law to the parties to instruments not payable on demand, in ease of providing payment. It arose before the age of steam, What grace when communication was slow and often difficult. is and how it It is said to have been a mere matter of indulgence ished by the at first, at the holder's election; however that may be, custom finally established it as matter of right in favor of the defendant. The rule is peculiar to the law merchant; and the reason for it having mostly ceased, it has been abolished by the Statute.


Negotiability in the law merchant is the property whereby the bill, note, or cheque passes, or may pass, from hand to hand like money, so as to give a holder in due course the

What negotiaright to hold the instrument and collect the sum bility in law

merchant is : payable, for himself, free from defences. The com- common law. mon law originally knew nothing of the kind, estoppel. except in regard to money and the English (not American) doctrine of market overt.' Much progress has been made in the common law, in one way or another, towards negotiability, not merely in the sense of the transferribility of choses in action, but of the right, by way of estoppel, of the transferrer to collect the same for himself free from defences; but it is misleading to say that negotiability in the law merchant is therefore only a matter of estoppel by the 'general law of our day.3 Negotiability in the law merchant arose in and rests upon custom alone. Estoppel is only a very late analogy; no authority on the law of bills, notes, or cheques has ever questioned the basis of the law or intimated that it was a matter of estoppel, however true it is that estoppel has been referred to as conferring a kind of negotiability upon certain instruments of the common law. 1

1 There is possibly a difference between the two, due to the persistent and just pressure of custom touching bills and notes, in cases of transfers by debtors to their creditors of securities for a pre-existing debt.

* N. I. L. 8 92.
s See Mr. Ewart's clever article, already referred to.

To be negotiable the instrument must be payable to bearer or to order, in terms or in plain meaning; and by the unwritten

law merchant it should not be under seal. The Form of words for negotia- latter rule is changed by the Statute; which probility: seal.

vides that the negotiable character of the instrument shall not be affected by affixing a seal to it. And it had before been held that the negotiability of paper of a corporation was not taken away by putting it under seal.3

1 See the cases quoted in Mr. Ewart's article. Of course Mr. Ewart does not deny that negotiability in the law merchant is due to custom, but his article argues that the law merchant, as regards its chief feature negotiability, is now lost in the general i, e. common law doctrine of estoppel.

? N. I. L S 13, 4.

8 Chase Bank v. Faurot, 149 N. Y. 532 ; Marine Manuf. Co. v. Bradley, 105 U. S. 175; Mercer County v. Hacket, 1 Wall. 83. The coupons of a corporation are proniissory notes. Boyer v. Chandler, 160 I. 394. Certificates of deposit payable to order are negotiable, by custom. Kirkwood v. First National Bank, 40 Neb. 484. So of course of the certification of cheques.



§ 1. DEFINITIONS. A PROMISSORY note is a written promise, and a bill of exchange a written order upon a person, to pay to a certain person or order, or to the order of a certain per- The different son,' or to bearer, o a certain sum of money, abso- instruments of

law mercbant. lutely. A cheque is a written order upon a bank or banker to pay on demand * (otherwise as in the case of a note or bill). • Draft' is a term of convenience, signifying either a bill of exchange or a cheque, but more commonly the former. Bills of exchange and cheques are foreign or inland; those drawn in one state or country and payable in another ar foreign; all others are inland. Paper is negotiable only when made payable, in terms or plain intent, to 'order,' or to bearer.'

Bills of exchange, especially foreign bills, are often drawn, for safety of transmission, in a numbered set of two or more, each containing a provision in effect that it is payable only in case the others are unpaid. Where a bill is so drawn the whole of the parts therefore will constitute but one bill." i N. I. L. § 15.

2 Id. & 16. Id. $$ 133, 191.

4 See Id. § 14. * Id. 192. The promise or the order is 'written' if there is a written signature to it.

6 N. I. L. $ 136. Bank of United States v. Daniel, 12 Peters, 32. But see Grimshaw v. Bender, 6 Mass. 156; Phoenix Bank v. Hussey, 12 Pick. 483 ; Buckner v. Finley, 2 Peters, 586 ; making the residence of the drawer and drawee the test. That cheques may be cheques though drawn in one country and payable in another, see Heywood v. Pickering, L. R. 9 Q. B. 428; Roberts v. Corbin, 26 Iowa, 315.

N. I. L. $ 185.

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