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A SUMMARY

OF THE

LAW OF BILLS OF EXCHANGE

AND

PROMISSORY NOTES.

CHAP. I.

What is a Bill or Note, Form and Obligation.

A BILL of Exchange is a written order or request, and a Promissory Note a written promise, for the payment of money absolutely and at all events, the one owing its existence and privileges to the law and custom of merchants, the other to the 3d and 4th Anne, c. 9. (1)

(1) Before the statute of Queen Anne many attempts were made to put promissory notes on the footing of bilis of exchange, but without success, vide Pearson v. Garrett, 4 Mod. 242. Clerke v. Martin, Lord Raym. 757. Salk. 129. Burton v Souter, Lord Raym 774. and Williams v. Cutting, Lord Raym. 825. Salk. 24. 7 Mod. 154. 11 Mod. 24. and see 4 Term. Rep. 151, 152.

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"By the 3d and 4th Anne, c. 9, § 1. Whereas it hath been held, that 'notes in writing, signed by the party who makes the same, whereby such party promises to pay unto any other person, or his order, any sum of money therein mentioned, are not assignable or indorsable over, within 'the custom of merchants, to any other person; and that such person 'to whom the sum of money mentioned in such note is payable, cannot 'maintain an action by the custom of merchants against the person who 'first made and signed the same; and that any person to whom such 'note should be assigned, indorsed, or made payable, could not within 'the said custom of merchants, maintain any action upon such note ' against the person who first drew and signed the same:' Therefore, to the intent to encourage trade and commerce, which will be much advanced, if such notes shall have the same effect as inland bills of exchange, and shall be negotiated in like manner: Be it enacted, that all notes in writing, that after the 1st day of May, in the year of our

The person who makes a bill is called the Drawer, the person to whom it is addressed the Drawee, and the person in whose favour it is made the Payee.

Lord 1705, shall be made and signed by any person or persons, body politic or corporate, or by the servant or agent of any corporation, banker, goldsmith, merchant or trader, who is usually, intrusted by him, her or them, to sign such promissory notes for him, her or them, whereby such person or persons, body politic and corporate, his, her or their servant or agent as aforesaid, doth or shall promise to pay to any other person or persons, body politic and corporate, his, her or their order, or unto beare, any sum of money mentioned in such note, shall be taken and construed to be, by virtue thereof, due and payable to any such person or persons, body politic and corporate, to whom the same is made payable, and also every such note payable to any person or persons, body politic and corporate, his, her or their order, shall be assignable or indorsable over, in the same manner as inland bills of exchange are or may be, according to the custom of merchants; and that the person and persons, body politic and corporate, to whom such sum of money is or shall be by such note made payable, shall and may maintain an action for the same, in such manner as he, she or they might do, upon any inland bill of exchange, made or drawn according to the custom of merchants, against the person or persons, body politic and corporate, who or whose servant or agent as aforesaid, signed the same; and that any person or persons, body politic and corporate, to whom such note, that is payable to any person or persons, body politic and corporate, his, her or their order, is indorsed or assigned, or the money therein mentioned ordered to be paid by indorsement thereon, shall and may maintain his, her or their action for such sum of money, either against the person or persons, body politic and corporate, who, or whose servant or agent as aforsaid, signed such note, or against any of the persons who endorsed the same, in like manner as in cases of inland bills of exchange.

[Promissory Notes are negotiable in all the States. In some they have been made so by statutes similar to that of Anne, while in others the provisions of that act appear to have been received as law without any express statute upon the subject. But although notes are negotiable in all parts of the Union, so far as to enable an endorsee or assignee to maintain an action in his own name against the maker, yet in the states of Vermont, New Jersey, Pennsylvania, Kentucky and Missouri, endorsees have not in general the privileges of endorsees by the law merchant. In all those states in an action against the maker of a note by the endorsee or assignee, the defendant is allowed to offset all demands which he had against the original payee of the note before notice of the endorsement. In some of the above enumerated states an endorsee cannot sue a remote endorser, and in some he must sue the maker of the note, unless insolvent, before he can bring an action against the endorser, and in all of them he is under some disadvantages. However in most of these States the acts incorporating banks exempt the notes discounted at such banks, and in some cases those lodged in them for collection, from these inconveniences, and place such notes on the footing of bills of exchange. And in New Jersey when a note is expressed to be payable "without dafalcation or discount," in an action upon it by the assignee, the defendant is not allowed to set off his de

If the Drawee accepts the bill, he is called the Acceptor. The person who makes a note is called the Maker, and the person to whom it is payable the Payee.

When a bill or note is indorsed, the person indorsing it, is called the Indorser, and the person to whom it is indorsed the Indorsee.

A note while in the hands of the payee, has this resemblance to a bill, that it is for the payment of money absolutely and at all events, and when transferred it is exactly similar to a bill of exchange (2).

Sect. 2.-No particular (3) words are necessary to make a bill or note; any order or promise which from the time of

mands against the assignor. A statute of Pennsylvania gives similar privileges to notes dated at Philadelphia, and expressed to be payable "without defalcation,' or without set-off. See M'Cullough v. Houston, 1 Dall. 441. as to the law in Pennsylvania; and see Yeaton v. The Bank of Alexandria, 5 Cranch 49, and other cases cited in a note to Ch. ix. post, as to the law in Virginia. See also Griffith's Annual Law Reg. Vols. 3 and 4. pp. 22, 48, 78, 116, 142, 224, 264, 362, 365, 403, 423, 467, 518, 585, 627, 670, 696, 796. 864, 943, 1006, 1068, 1139, 1300.]

(2) In Heylin v. Adamson, Burr. 669. The question was, whether the indorsee of a bill was bound to make a demand upon the drawer as the indorsee of a note must upon the maker, and per Lord Mansfield, "while a note continues in its original shape of a promise from one man "to another, it bears no imilitude to a bill; but when it is indorsed, the "resemblance begins; for then it is an order by the indorser upon the "maker to pay the indorsee, which is the very definition of a bill; the "indorser is the drawer, the maker of the note the acceptor; and the "indorsee, the person to whom it is made payable; and all the authori"ties, and particularly Lord Hardwicke, in a case of Hamerton v. "Mackarell, M. 10 Geo. II. put promissory notes on the same footing "with bills of exchange." And in Brown v. Harraden, 4 Term Rep. 148. where the court decided that three days grace should be allowed on promissory notes, Lord Kenyon observed, that the effect of the statute was, that notes were wholly to assume the shape of bills; and Buller J. added, that the cases cited in the argument showed clearly, that the Courts of Westminster had thought the analogy between bills and notes so strong, that the rules established with respect to the one, ought also to prevail as to the other; that the language of the preamble of the Act was express, that it was the object of the legislature to put notes exactly on the same footing with bills, and that the enacting part pursued that intention. The same doctrine is to be found in Carlos v. Fancourt, 5 Term Rep. 482. Edie v. East India Company, Burr. 1224. (3) D. Lord Raym. 1397. Str. 629 8 Mod. 364. Chadwick v. Allen, Str. 706.

A note was in these words: "I do "acknowledge that Sir Andrew Chadwick has delivered me all the

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