I. CHAPTER be payable with interest, by stated instalments with or without a proviso making the whole due on default of any instalment, or according to an indicated rate of exchange or a rate to be ascertained as directed by the bill (d). The person signing is called the drawer, the person to whom it is addressed is called the drawee, and the person to receive the money the payee. When the drawee has undertaken to pay the bill, he is called the acceptor. The bill may also be drawn payable to the drawer or to his order, or to the drawee or his order (e). If the bill is made payable to C. or bearer, C. may transfer the bill to D. by merely delivering it into his hands, and D. then stands in the same situation with regard to the acceptor as C. the original payee did (ƒ). If the bill be payable to C., to C.'s order, or to C. or order, C. cannot then transfer except by a written order, usually on the back of the bill, called an indorsement and delivering it, after which C. is called the indorser, and D., if named in the indorsement, the indorsee; if no one be named in the indorsement the bill then becomes payable to bearer. Every contract on a bill or note is incomplete and revocable until delivery (g). Holder is a general word, and means payee or indorsee of a bill in possession of it, or bearer of a bill payable to bearer (h). Holder in due course is one who has taken a bill complete and regular on its face, before it was due and without notice of any previous dishonour, in good faith and for value, and without notice at the time of any defect in his transferor's title. Every holder is prima facie a holder in due course (i). No one but the holder can maintain an action in his own name on a bill of exchange or promissory note (j). (d) Code, s. 9 (1). (e) Where in a bill drawer and drawee are the same person, or the drawee is a fictitious person, or a person not having capacity to contract, the holder may treat it at his option, either as a bill or a note. Code, s. 5. (f) For brevity's sake, it is convenient to call the drawer A., the acceptor B., the payee C., and the first indorsee D. (g) Delivery means transfer of possession, actual or constructive. Code, ss. 2, 21, 84, and 89. (i) Code, ss. 29 (1) and 30 (2). Holder in due course shortens considerably the former lengthy definition, "bona fide holder for value before due without notice.' (j) Code, s. 38 (1). A man who has no interest in the bill nor possession of it, but only lends his name for the purpose of suing on it, is not the holder. Emmett v. Tottenham, 8 Ex. 884; Gill v. Lord Chesterfield, ibid. ; Sainsbury I. By the common law of England no contract or debt is CHAPTER assignable, our ancestors appearing in the time of simplicity to have apprehended from such transfers much oppres- Two peculiar sion and litigation. But mercantile experience has proved qualities of the assignment of debts to be indispensable, and bills of contracts on exchange to be the most convenient instruments for facili- bills or notes. tating, securing, and authenticating the transfer. They have, therefore, come into universal use among all civilized nations, and the common law has recognized them as part of the Law Merchant. And though the rigidity of the common law has now been relaxed (36 & 37 Vict. c. 66, s. 25) to the extent of making debts and other legal choses in action assignable by writing (written notice being given to the debtor), yet bills and notes retain their superior convenience in being assignable by simple delivery, or indorsement and delivery, according to the requirements above explained. The common law, again, distinguishes contracts into two kinds: contracts under seal or by deed, and contracts not under seal or simple contracts. Contracts under seal are valid without consideration; simple contracts are not enforceable unless consideration be averred and proved. All the contracts arising on a bill of exchange are simple contracts, but they differed in the eyes of the common law from other simple contracts in these two particulars: first, that the benefit of the contract has long been assignable at law, and its obligation communicable (k); secondly, that consideration will be presumed till the contrary appear (1). v. Parkinson, ibid. But if before action it be indorsed and delivered to an agent without his principal's knowledge, and the principal after action brought ratifies the delivery, that ratification will relate back, and make the agent holder from the time of delivery. Ancona v. Marks, 31 L. J., Ex. 163; 7 H. & N. 686. If a man find or steal a bill, though his mere possession will give him the right to retain the instrument as against strangers, yet he cannot sue on the bill, for under a traverse of the indorsement or delivery to him, which he must allege in his statement of claim, the real facts may be shown. Marston v. Allen, 8 M. & W. 494. (k) Code, ss. 8 and 31. It was never necessary to plead usages which are part of the law mer- (1) Code, s. 30. CHAPTER I. Effect of drawing or indorsing. How far bills considered as chattels. The legal effect of drawing a bill, payable to a third person, is a conditional contract by the drawer to pay the payee, his order, or the bearer, as the case may be, if the acceptor do not. The effect of accepting a bill, or making a note, is an absolute contract, on the part of the acceptor of the one, or maker of the other, to pay the payee, his order, or the bearer as the instrument may require. The effect of indorsing is a conditional contract, on the part of the indorser, to pay the immediate or any succeeding indorsee, or bearer, in case of the acceptor's or maker's default. Bonds, bills, notes, and other securities are not the suband notes are jects of larceny at common law. For the words bona et catalla used in indictments "do not of their proper nature," says Lord Coke, "extend to charters and evidences concerning freehold, or inheritance, or obligations, or other deeds. or specialties, being things in action " (m). And these observations, as to obligations and deeds, are at common law applicable also to bills of exchange and promissory notes. In an indictment, bills or notes ought not in strict propriety to be described as chattels (n). But for almost all purposes, they are comprehended under the general words. "goods and chattels," or either of them, and as such are forfeitable to the crown, and may be the subject of reputed ownership or fraudulent transfer (o). May be taken in execution. Where a bill or note might At common law, neither money nor securities for money could be taken in execution, at the suit of a subject. But the 1 & 2 Vict. c. 110, s. 12, rendered money, bank notes, cheques, bills, promissory notes and other securities for money liable to be taken in execution. The money and bank notes are to be handed over by the sheriff to the execution creditor, and the sheriff, on receiving a sufficient indemnity, is to sue in his own name. Bills and notes may be taken under an extent. A bill, cheque, or note, or an indorsement thereon made (m) Calye's case, 8 Co. Rep. 33; words "valuable securities" and (n) 4 Bla. Com. 234; 2 East, case. (0) Slade's case, 4 Co. Rep. 93; Pullock v. Dodds, 2 B. & A. 258; Ryall v. Rolle, 1 Atk. 165; 1 Ves. sen. 363; Hornblower v. Proud, 2 B. & A. 327; Cumming v. Bailey, 6 Bing. 363; 4 Moo. & P. 36; Edwards v. Cooper, 11 Q. B. 33. See, too, post, Chapter on BANK RUPTCY. CHAPTER instrument. before the Act 1 Vict. c. 26, might have had a testamentary effect. A testator gave three cheques, at different times, to a lady, and on the corresponding parts of the cheque book operate as a were found entries by him to the effect that they were given testamentary as a provision for her in case of his death. The cheques were held to be testamentary instruments, giving cumulative legacies (p). Parol evidence is inadmissible to show that an instrument was only to be payable in case of the testator's death (q). An indorsement on a note as "I give this note to C. D.," might have been testamentary (r). A bill or promissory note may, in some cases, be a decla- As a declararation of trust (s). (p) Bartholomew v. Henley, 3 Phill. 317. (7) Woodbridge v. Spooner, 3 B. & A. 233; 1 Chit. R. 661. (r) Chaworth v. Beech, 4 Ves. 565. For the circumstances under which bills and notes will pass (s) Murray v. Glasse, 23 L. J., tion of trust. 6 CHAPTER What it is. A PROMISSORY note, or, as it is frequently called, a note of hand, is an unconditional promise in writing, made by one person to another, signed by the maker, 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). A promissory note is inchoate and incomplete until delivery thereof to the payee or bearer (b). The (a) Code, s. 83 (1); Storm v. (b) Sect. 84; Chapman v. Cot- while sect. 21 treats of contracts of a promissory note; though more probably it is only an accidental variance of expression, as there is no case, it is believed, which draws any distinction between the maker of a note and the acceptor of a bill so far as regards the necessity and effect of delivery; while the reasoning in Cox v. Troy (5 B. & A. 474) was expressly applied to a note in Chapman v. Cottrell. But the cases are not quite parallel, for the original delivery or issue of a bill is by the drawer, who till acceptance is the principal debtor. |