CHAPTER II. NEGOTIABLE INSTRUMENTS. SECTION 3. BILLS OF EXCHANGE. A bill of exchange is an unconditional order in writing for the payment of a certain sum of money absolutely and at all events.1 Bills of exchange are either inland or foreign. An inland bill of exchange is one payable in the same state or country in which it is drawn. A foreign bill of exchange is one payable in some state or country other than that in which it is drawn. There are three original parties to a bill of exchange: the drawer (who draws the order, or in other words, orders the payment of the money), the payee (in whose favor the order is drawn), and the drawee (on whom the order is drawn). SECTION 4. THE ORDER. The most essential characteristic of a bill of exchange is the order to pay. No particular words are necessary, but there must be an absolute order to pay. There must be something more than the asking of a favor, or the conferring the authority to make payments if the drawee chooses to do so.* 1 Some other definitions are as follows: "An unconditional order from A to B directing B to pay Ca certain sum of money therein named." Byles on Bills. "An unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money tr or to the order of a specified person or to bearer.' English Bills of Exchange Act, Sec. 3. • Patterson vs. Poindexter, 6 W & • Ellar's Case, 1 Block, C. C., 323, SECTION 5. PROMISSORY NOTE. 5 A promissory note is an unconditional promise in writing for the payment of a certain sum of money absolutely and at all events. There are only two original parties to a promissory note, the maker (who makes the note and promises to pay the money) and the payee (in whose favor the note is made). SECTION 6. ESSENTIALS OF BILLS AND NOTES. Although bills and notes differ from each other in the nature of the contract created by each, the law governing each is in most of its essentials the same. The common essential characteristics of these two species of negotiable instruments will be considered in the following sections. SECTION 7. CERTAINTY OF TERMS. One of the most striking characteristics of the laws governing bills and notes is the necessity for certainty in the terms of the contracts. First of all • American and Eng. Ency. of to the certainty required in their terms and their general elements, but, at its inception, a note differs from a bill in the parties thereto. Only the rights of the maker and the payee are involved in a promissory note; when, however, the payee transfers the note to an indorsee the similarity of the note to an accepted bill is perfected; it is then an order from the payee upon the maker for the payment of money to the indorsee; the indorser (payee) is the drawer, the maker of the note is the acceptor, and the indorsee is the payee. Remembering this analogy, decisions with regard to bills may be applied mutatis mutandis to notes.' "" Am. & Eng. Ency. of Law, Vol. IV, p. 79. there must be certainty of payment. The order or promise must be for the payment of a definite sum of money, absolutely and under all circumstances. Certainty as to time of payment is essential to a bill or note, and any contingency in this respect will render the instrument containing it non-negotiable." Exceptions to this last rule exist in conditions sanctioned by commercial usage as to demand, presentment, or sight, and contingencies when the payment depends on an event which is bound to ultimately happen.❞ The amount of the payment to be made must be certain at the time the order or promise is given. It is sufficient if the amount to be paid at any given time can be ascertained from the face of the note;10 but it is not sufficient that the amount payable is capable of being rendered certain at some future time." SECTION 8. NECESSITY FOR PAYMENT IN MONEY. Except as modified by statutory provisions, bills of exchange and promissory notes must be for the payment of money only. "Instruments ordering or promising the payment of a certain amount in specific articles," or in bonds, notes or checks, 13 or ordering or promising the delivery of certain goods or chattels," are not obligations for money, and consequently are not valid bills of exchange or promissory notes. But, by statute in many states, such instruments are given the qualities of negotiable instruments.15 "Protection Ins. Co. vs. Bill, 31 • American and English Ency. of 10 Smith vs. Crane, 33 Minn., 144; 11 Stillwell vs. Craig, 58 Mo., 24. "Mercantile paper may be given for the payment of a certain sum in denominations of foreign money," -16 but whether an instrument payable generally in money or currency of a foreign state is negotiable is not settled."' 17 18 A bill or note may be made payable in one particular denomination or kind of money. SECTION 9. 19 NEGOTIABILITY. The most striking characteristic of both bills and notes at the present day is their negotiability. This quality, however, did not exist at first.20 17 Souther vs. Wallace, 20 Nova Scotia, 509; 16 Can. Sup. Ct., 717. 18 Am. & Eng. Ency. of Law, Vol. IV, p. 105. Chryster vs. Renois, 43 N. Y., 209. 30 "It now becomes necessary to begin again near the same point of departure and trace the gradual recognition of the transferability of bills of exchange. Hitherto we have observed no traces of a custom to make bills of exchange payable to order or bearer. Just when this custom originated cannot be stated with certainty. It embodied a happy thought. That the bill of exchange should become negotiable was indispensable to growing commerce. Hartmann, a late German writer on bills of exchange, states that the first known instance of the endorsement of these instruments occurs in the Neapolitan Pragmatica of 1607. Savary is said by the French writer, M. Nougier, to have assigned it to a later date, to-wit, 1620. In England the law of bills was somewhat less advanced than on the continent, and we have good evidence that bills were never, in Eng land, made payable to order or bearer until after 1622." "John Marius published, in 1651, a small treatise concerning bills of exchange. It was republished about 1670 with some emendations and additions. In the preface to this edition he says his work is the fruit of twenty-four years' experience as a Notary Public in the Royal Exchange of London." "It is to be inferred from his preface that the usage and practice concerning bills of exchange were substantially the same in 1651 and 1670, and whatever advances in theory his treatise shows over Malynes's earlier essay (1622) belongs to the period between 1622 and 1651, rather than to the period from 1651 to 1670. This inference is corroborated by what we learn from other sources. "The striking feature of the bill of exchange in Marius's pages is that words of negotiability have been inserted. He gives us a dozen specimens, all dated 1654. Each contains the words 'to A or order,' or 'to A or assigns.' The idea seems to be that 'or assigns' should be used if the rights consequent upon transfer are likely to be Even today, "while negotiability is the characteristic quality of bills and notes, it is not essential to their validity." Non-negotiable instruments may be declared upon as bills and notes,22 have been held to import a consideration," and are entitled to days of grace." By indorsing such an instrument the payee becomes liable to the indorsee,25 but the latter questioned in England. The other phrase belongs to bills going into foreign parts or drawn in a foreign language." "Another equally striking feature is that the custom of merchants now includes bills drawn in England upon another city within the realm. Marius describes himself as a notary of twenty-four years' standing for both inland and outland bills. In 1608, John Trenchant had observed in his arithmetic, printed at Lyons, that real exchange could only take place between cities subject to different lords. Neither does Malynes give recognition to inland bills. Marius takes some pains to vindicate their right to be placed upon the same footing as foreign bills. "A bill of exchange which shall be made for moneys taken up in Edinborough, York, Bristol, Exon, Plymouth, Dover, or any other part of England or Scotland, and payable at London, is in all things as effectual and binding as any bill of exchange made beyond the seas and payable here in England. * The inland and outland bills ought to be esteemed of equal worth and the custom of merchants on both equally observed." "Both classes of bills being made payable to order or assigns, they were now transferable by indorsement, or, as he calls it in both cases, by assignment. He gives the following illustration of assignment by two successive holders: 'Pay the contents on the other side hereof to Mr. Humfrey N., or assigns, value of Mr. Joseph B., Rotterdam, Oct. 4, 1654. Roger C.' The second indorsement is briefer: 'Pay the contents hereof to Mr. John D. (Signed) Humfrey N.' "He carefully states the effect of an indorsement in blank. It was sufficient to pass the title and authorize the holder to write a special indorsement to himself or & receipt in full over the signature. "The effect of the absence of words of negotiability is stated in these terms: 'If the bill be made payable positively to such a man, and not to such a man or his assigns, or order, then an assignment on the bill will not serve the turn, but the money in the strictness of the letter must be immediately paid to such a man in person, and he must be known to be the same man mentioned in the bill of exchange, so that the money may not be paid to a wrong party, and so the acceptor forced to pay it twice. And if the bill be made payable positively to such a man as hath been said, such a man's name written on the back side of the bill in blank, is no sufficient warrant for another man to come (as in his name) to receive the money, but the man himself, to whom the bill is payable, must appear in person.' Street's Foundations of Legal Liabilities, Vol. II, pp. 354 et seq. Coursin vs. Ledlie, 31 Pa. St., 506. " Kendall vs. Galvin, 15 Me., 131; 52 Am. Dec., 141. 23 Arnold vs. Sprague, 34 Vt., 402. "Reed vs. Murphy, 1 Ga., 236. 25 Bristol vs. Warner, 19 Conn., 7. |