A BILL of Exchange is a written order(a) from A. to B. directing B. to pay C. a sum of money therein named. (1) A. is called the drawer, B. the drawee, and C. the payce. (a) It is said that it was formerly essential to the validity of a bill of exchange, that it should be drawn in one place and payable in another: no such requisite now exists by the English law, although it is in general otherwise, according to the defiaitions in the codes prevailing on the continent of Europe; see the note of Mr. Serjeant Manning to Miller v. Thompson, 4 M. & G. 260. (1) This definition is remarkable for its conciseness and accuracy. Yet, perhaps, it does not sufficiently express the quality of absoluteness, or that the money shall be paid absolutely and at all events. The learned author uses the word "direct" instead of the word "request," which is the more usual. The former word implies a command, and that the drawee has a right to require the payment. The case of Little v. Slackford, (1 Moody and Malkin, 171, 22 Eng. Com. Law, 280, is supposed to support the position that a bill of exchange must purport to be a demand made by a party having a right to call on the other to pay. That was a case however in which the paper was offered under a count for money paid, and was objected to for want of a stamp. In Ruff v. Webb, 1 Esp. Rep. 129, the paper was: "Mr. Nelson will much oblige Mr. Webb, by paying J. Ruff or order Sometimes A. the drawer is himself the payee. And usually the bill is made payable, not to the payee alone, but also to his order or to the bearer. When B., the drawee, has undertaken to pay the bill, he is called the acceptor. 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 then D. stands in the same situation with regard to B. the acceptor, as C. the original payee did. If the bill be payable to C., or order, then C. cannot transfer, ex twenty guineas on his account." Lord Kenyon held it to be a bill of exchange. Judge Story has remarked that language of mere civility cannot, of itself, change the nature of the instrument; and in order to displace the construction, that the instrument is a bill, it would seem to require, that the language necessarily imported to ask a favour and not to be words of civility. Story on Bills, 33, note. It must be admitted that this is attempting a very refined distinction, and frequently of very difficult application in the construction of such instruments. It is well settled that it is not necessary to constitute a bill of exchange that the drawer should have funds in the hands of the drawee; Luff v. Pope, 5 Hill, 413; S. C. 7 Hill, 577, and even where he has it is not in all cases that he has a right to draw. To give such right there must be an agreement to accept, or a usage of trade, or course of dealing between the parties equivalent thereto. Where the draft is for a part only of the debt due the drawer, the creditor has no right to divide his cause of action without the consent of the debtor. Where the whole of a particular fund or debt by name is drawn for, so as to give the payee or holder a right to sue the drawer without acceptance in the name of the drawee, this is an assign. ment in equity, but not a bill of exchange. Harrison v. Williamson, 2 Edw. Rep. 430. Quin v. Hanford, 1 Hill, 82. Mandeville v. Welch, 5 Wheaton, 286. It seems therefore that Bayley's definition, which has been adopted by Chancellor Kent, is preferable to that in the text. "A Bill of Exchange is a written order or request by one person to another for the payment of money absolutely and at all events." Judge Story objects to this, as well as other definitions, on the ground that it does not include the idea of nego tiability, which, he thinks, although not by our law essential to the instrument, yet undoubtedly is that peculiar distinguishable quality, which, practically speaking, among merchants constitutes its true character. Story on Bills, 2, 3, 4. He accordingly expresses a preference for Mr. Kyd's definition, Kyd on Bills, p. 3. "An open letter of request, addressed by one person to a second, desiring him to pay a sum of money to a third or any other to whom that third person shall order it to be paid; or it may be payable to bearer." It is to be observed, however, that this definition expresses merely the idea of assignability, not of negotiability, which is that peculiar commercial quality by which not only the instrument is assignable at law, but the assignee for value bona fide and without notice cannot be effected by any equities, as between the original or prior parties. It is evident that all the qualities of an instrument need not enter into the definition, but only such as distinguish it on its face from other instruments. cept by a written order, usually on the back of the bill, called an indorsement, after which C. is called the indorser, and D., to whom it may be so transferred, the indorsee. Holder is a general word, applied to any one of the parties in possession of the bill, and entitled, at law, to receive its contents from another.(b) [*2] By the common law of England, no contract or debt is assignable, our ancestors appearing in the times of simplicity, to have apprehended from such transfer much oppression and litigation. But mercantile experience has proved the assignment of debts to be indispensable, and bills of exchange to be the most convenient instruments for facilitating, securing, and authenticating the transfer. They have, therefore, come into universal use among all civilized nations, and the common law has recognised them as part of the law merchant.(c) 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 void unless consideration be averred in pleading and established in evidence. All the contracts arising on a bill of exchange are simple contracts, but they differ from other simple contracts in these two particulars: first, that they are assignable; (d) secondly, that consideration will be presumed till the contrary appear. (1) (b) This latter branch of the definition is essential. For if a man find or steal a bill, though his mere possession will give him a title to retain the instrument as against strangers, yet he cannot sue on the bill, for under a traverse of the indorsement or delivery to himself, which he must allege in his declaration, the circumstances attending his acquisition of the bill may be shewn. Marston v. Allen, 8 M. & W. 494. (c) Usages which are part of the law merchant need not be pleaded. Such are the assignable qualities of bills of exchange and bills of lading. Such also the general lien of bankers on the securities of their customers. "When," says Lord Campbell, "a general usage has been judicially ascertained and recognised it becomes part of the law merchant, which Courts of justice are bound to know and recognise." Brandao v. Barnett, 3 C. B. Rep. 530, Dom. Proc.; Barnett v. Brandao, 6 M. & G. 665. (d) In one sense a bill of lading is assignable, that is to say, its indorsement as signs the property, but it does not transfer the contract. Thompson v. Dominy, 14 M. & W. 403. (1) Bills and notes, unlike other parol contracts are prima facie evidence of valuable consideration, not only as be tween the original parties but as against third persons. In all cases where the bill can be used as evidence either 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, against the parties or against third persons, the same legal presumption arises of its having been given for value received as exists in relation to a deed expressed to be given for a valuable consideration. A bill of exchange, therefore, although according to the general principles of the common law it is to be condition in the light of a simple contract is nevertheless in this respect entitled to the privilege of a speciality, which carrying with it internal evidence of a valuable consideration, supersedes the necessity of avering and proving one. This privilege always belonged to foreign bills, and has at length, though not without some struggles as it is said, been conceded to inland or domestic bills, and promissory notes. Mandeville v. Welch, 5 Wheaton, 577. Murry v. Clayburn, Bibb, 300. As between the original parties, how ever, the bill is only prima facie evidence of consideration, and it may be inquired into and rebutted. The People v. Howell, 4 Johns. 296, 303. Pearson v. Pearson, 7 Johns. 26, 28. Schoonmaker v. Roosa, et al. 17 Johns. 301. Ryberg et al. v. Snell, 2 Wash. C. C. Rep. 294. And on the same principle where the consideration is less than the amount of the bill or note, no recovery can be had beyond the sum actually paid. Bramin v. Hess, 13 Johns. 52. Brown v. Mott, 7 Johns. 361. Mann v. Commission Co., 15 Johns. 44. So if the holder claim by indorsement after the note or bill has become due or has taken it with a knowledge of fraud or other equitable circumstances, entitling the maker to avail himself of the defence, this is equally provable as a want or failure of consideration between the original parties. It is to be carefully noted as a very important and well settled distinction however, that the mere knowledge of the holder when he took the note that it was without consideration as between the original parties, or in other words, an accommodation note or bill, is not available as a defence, and will not be sufficient to throw upon the holder the burthen of proving that he gave value, though if it be shown that the note or bill has been put into circulation fraudulently or feloniously, that will shift the onus. Jarden v. Davis, 5 Wharton, 338. Albrecht v. Strimpler, 7 Barr, 476. But want or failure of consideration may be set up against a holder who takes the instrument after it becomes due. Barnet v. Offerman, 7 Watts, 130. If, however, an action is brought by the indorsee of a bill or note who has given value for it before it arrives at maturity, when it is not void in its creation, the consideration in general cannot be the subject of inquiry. The diversity is founded in this: that to strengthen and facilitate commercial intercourse, which is carried on through the medium of this species of security, it is necessary that the fair holder of a bill for value paid should not be affected by a want of consideration between the prior parties. If, however, the holder of a bill received it without consideration, then, as was justly said by Eyre, C. J. in Collins v. Martin, et. al., 1 Bos. and Pul 651, "He is in privity with the first holder, and will be affected by every thing which would affect him." Lawrence v. Stonington Bank, 6 Conn. 521. or order, or 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 subjects [*3] of larceny at common law. For the words bona et catalla, used in indictments, "don't of their proper nature," says Lord Coke, “extend to charters and evidences concerning freehold, or inheritance, or obligations, or other deeds or specialities, being things in action".(e) In an indictment, bills or notes ought not to be described as chattels.(f) But, for almost all purposes, they are comprehended under the general words goods and chattels, or either of them. Thus, as chattels, they are forfeitable to the Crown, and may be the subject of reputed ownership or fraudulent transfer.(g) At common law, neither money nor securities for money could be taken in execution, at the suit of a subject. But now, by the 1 & 2 Vict. c. 110, s. 12, money, bank notes, checks, bills, promissory notes, and other securities for money, may be taken in execution. The money and banks 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, on the checks, bills, and notes. (h) Bills and notes may be taken under an extent. A bill, check, or note, or an indorement thereon, made before the late act, 1 Vict. c. 26, may be a testamentary instrument. A testator gave three checks, at different times, to a lady, and on the corresponding parts of the check-book were found entries by him to the effect that they were given by him to make provision for her in case of his death. The checks were held to be testamentary instruments, giving cumulative legacies(i). But parol evidence is inadmissible to show that an instrument was only to be payable in case of the testa (e) Caley's case, 8 Rep. 33. (ƒ) Sadi and Morris's case, 2 East, P. C., c. 16, s. 37. (g) Slade's case, 4 Co. Rep. 93; Bullock v. Dodds, 2 B. & Al. 258; Ryal v. Rolle, 1 Atk. 165; 1 Ves. sen. 363; Hornblower v. Proud, 2 B. Al. 327; Cumming v. Baily, 6 Bing. 363; 4 Moo. & P. 36, S. C.; Edwards v. Cooper, 11 Q. B. Rep. 33. See Chapter xxxv. on Bankrupcy. (h) See Chapter xi. on Transfer. (i) Bartholomew v. Henley, 3 Phill. 317. |