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NEGOTIABLE INSTRUMENTS.—" A negotiable instrument," writes His Honour Judge Willis in his work on Negotiable Securities, "is one the property in which is acquired by any one who takes it bona fide and for value, notwithstanding any defect of title in the person from whom he took it ; from which it follows that an investment cannot be negotiable unless it is such and in such a state that the true owner could transfer the contract or engagement contained therein by simple delivery of the instrument." A bill of exchange or a cheque may be taken as the most generally known form of a negotiable instrument. But in the light of the above definition, it is evident that a bill or cheque is not necessarily a negotiable instrument ; it is essential that the bill or cheque should be "such and in such a state" that the true owner can transfer the contract contained therein by simply delivering the instrument to some person or other. It is obvious that he cannot do this if the bill or cheque is payable to " A. B. or order " and A. B. has not indorsed it, for without such an indorsement there can be no transfer of the contract represented by the document. When, however, the bill or cheque has been indorsed by A. B. without restriction, it becomes a negotiable instrument, for the contract it represents is thenceforth, so long as no subsequent holder restricts the transfer by indorsement, freely trans ferable by delivery simply. Consequently a bill or cheque payable " to bearer," or to "A. B. or bearer" is, as it stands, a complete negotiable in strument. As completely so as a Bank of England note, which is perhaps the best illustration of such an instrument. In general parlance, however, an instrument is called "negotiable" if it is one belonging to a class capable of negotiation in the strict sense of the word. Negotiable instruments have their original sanction in mercantile usage, and to-clay they have effect either by the authority of the law itself, in ratification of mercantile usage, or by that usage only. The importance of this subject to the man of busi ness is such that there is adequate warrant for here introducing an authorita tive account of the nature and history of negotiable instruments, the account being an adapted and abridged extract from the judgment of Chief Justice Cockburn in the case of Goodwin v. Rawls.

There is no absolute need that an instrument, in order to be capable of nego tiability by the law merchant, should strictly adhere to any old-time mercantile form. It may not contain a direct promise to pay nioney, but only a promise to give security for money, yet it may be a negotiable instrument. Any opinion to the contrary is founded on the view that the law merchant is fixed and stereo typed, and incapable of being expanded and enlarged so as to nieet the wants and requirements of trade in the varying circumstances of commerce. It is true that the law merchant is sometimes spoken of as a fixed body of' law, forming part of the common law, and as it were coeval with it. I3ut as a matter of legal history, this view is altogether incorrect. The law merchant thus spoken of NN ith reference to bills of exchange and other negotiable securities, though forming part of the general body of the lex tnetratoria, is of comparatively recent origin. It is neither more nor less than the usages of merchants and traders in the differ ent departments of trade, ratified by the decisions of Courts of law, which, upon such usages beinr; proved before them, have adopted them as settled law with a view to the interests of trade and the public convenience, the Court pro ceeding herein MI the well-known principle of law that, with reference to trans actions in the different departments of trade, Courts of law, in giving effect to the contracts and dealings of the parties, will assume that the latter have dealt with one another upon the footing of any custom or usage prevailing generally in the particular department. Accordingly, " when a general usage has been judi cially ascertained and established," said Lord Campbell, in Brandao v. Bartlett, "it becomes a part of the law merchant, which Courts of justice are bound to know and recognise." Bills of exchange are known to be of comparatively modern origin, having been first brought into use by the Florentines in the twelfth century. In the time of Edward IV. promissory notes, payable to bearer, or to a man and his assigns, were known in this country ; and though a statute of Richard II. expressly refers to bills of' exchange as a means of conveying money out of the realm, yet, so late as the seventeenth century, there is no doubt that they were not very largely in use in England among merchants. With the de velopment of English commerce their use would of course increase, yet the earliest case on the subject to be found in the English books is one of thc reign of James I. Up to this time the practice of making these bills negotiable by indorsement had been unknown, and the earlier bills are found to be payable to a man and his assigns, though in some instances to bearer. But about the com mencement of the seventeenth century the practice of making bills payable to order, and transferring them by indorsement, took its rise ; and from its obNious convenience this practice speedily came into general use, and, as part of the general custom of merchants, received the sanction of our Courts. At first the tse of bills of exchange seems to have been confined to foreign bills between English and foreign merchants. It was afterwards extended to domestic bills

between traders, and finally to bills of all persons whether traders or not. In the meantime promissory notes had also come into use. differing herein from bills of exchange that they were not drawn upon a third party, but contained a simple promise to pay by the maker, resting therefore upon the security of the maker alone. They were at first made payable to bearer, but when the practice of making bills of exchange payable to order, and making them transferable by indorsement, had once become established, the practice of making promissory notes payable to order, and of transferring them by indorsement, as had been done with bills of exchange, speedily prevailed. For some time the courts of law acted upon the usage with reference to promissory notes, as well as with reference to bills of exchange. But in the time of Chief Justice Holt a some what unseemly conflict arose between him and the merchants as to the negotia bility of promissory notes, whether payable to order or to bearer, the Chief Justice taking what must now be admitted to have been a narrow-minded view of the matter, setting his face strongly against the negotiability of the instruments, con trary, as we are told by authority, to the opinion of Westminster Hall, and in a series of successive cases persisting in holding them not to be negotiable by in dorsement or delivery. The inconvenience to trade arising therefrom led to the passing of a statute of Anne, whereby promissory notes were made capable of being assigned by indorsement, or made payable to bearer, and such assignment was thus rendered valid beyond dispute or difficulty. Then came the epoch when a new form of security for money, namely goldsmiths' or bankers' notes, came into general use. Holding them to be part of the currency of the country, as cash, Lord Mansfield had no difficulty in holding, in Miller v. Race, that the pro perty in such a note passes, like that in cash, by delivery, and that a party taking it bond fide and for value, is consequently entitled to hold it against a former owner from whom it has been stolen. In like manner it was held, in Collins v. Marlin, that where bills indorsed in blank had been deposited with a banker, to be received when due, and the latter had pledged them with another banker as security for a loan, the owner could not maintain an action to recover them from the holder. Both these decisions of course proceeded on the ground that the property in the bank-note payable to bearer passed by delivery, that in the bill of exchange by indorsement in blank, provided the acquisition had been bond fide. A similar question arose in lllookey v. Pole, in respect of an exchequer bill, noto riously a security of modern growth. These securities being made in favour of blank or order, contained this clause, "If the blank is not filled up the bill will be paid to bearer." Such an exchequer bill having been placed, without the blank being filled up, in the hands of the plaintiff's agent, had been deposited by him with the defendants on a bond fide advance of money. It was held, in favour of the defendants, that the bill was a negotiable instrument. Such a decision, and indeed all the decisions in favour of the negotiability of mercantile instru ments, proceed, according to the judgment of Mr. Justice Holroyd in that case, "upon the nature of the property (i.e. money) to which such instruments give the right, and which is in itself current, and the effect of the instruments, which either give to their holders, merely as such, a right to receive the money, or specify them as the persons entitled to receive it." Another very remarkable instance of the efficacy of usage is to be found, in much more recent times, in the use of the cheque. lnsteaa of the banker using his own notes in return for the money of the customer deposited with him, he gives credit in account to the depositor, and leaves it to the latter to draw upon him, to bearer or order, by an instrument called a cheque. Upon this state of things the general course of dealing between bankers and their customers has attached incidents previously unknown, and these by the decisions of the Courts have become fixed law. Thus while an ordinary drawee, although in admitted possession of funds of the drawer, is not bound to accept, unless by his own agreement or consent, the banker, if he has funds, is bound to pay on presentation of a cheque on demand. Besides this, a custom has grown up among bankers themselves of marking cheques as good for the purposes of clearances, by which they become bound to one another. Mer cantile usage having thus rendered negotiable the instruments already referred to, but circumstances having changed and the forms of instruments with them, the question arose whether a new usage which had sprung up under altered cir cumstances was to be less admissible than the usages of past times. This was the question that came before the Chief Justice in the case of Brandao v. Barnett, and which he answered to the effect set out in the earlier part of this article. The particular question in the case was whether scrip can constitute a legally negotiable instrument when it is issued in England by the agent of a foreign government in order to entitle the holder, on payment in full of his instahnents, to delivery by the agent of definitive bonds of the foreign government, such scrip being already negotiable by mercantile usage. And see BILLS OF LADING ; DOCK WARRANT.