Sec. 747. HISTORY OF NEGOTIABLE PAPER.-There is some dispute as to the exact time when certain forms of negotiable paper began to be used. Bills of exchange were used by the Romans in the time of Cicero, but did not possess the negotiable characteristics of our bills of exchange. Similar bills of exchange were made use of by the Venetians prior to 1272, their origin being ascribed to the Jews when exiled from various countries for usury, enabling them to draw their wealth after them into countries where they were permitted to reside. The Lombards and Florentines are also given the credit of their invention, and further it is stated that they were employed by King John as early as 1202 to remit money to his agents at Rome. As a result of the various theories Mr. Parsons arrives at the conclusion that bills of exchange were "in use among the commercial nations of Europe, and especially along the shores of the Mediterranean, about five centuries ago, and that they were then of recent introduction."*

Inland bills of exchange, which are distinguishable from foreign bills, in being drawn and payable in the same country, were of later origin, and were first used in England about the reign of Charles II. While promissory notes, though possibly used as evidence of obliga

instruments lies in the protection given to holders of negotiable paper against the equities existing between prior parties.

*1 Parson's Notes and Bills, 2. See also in this connection, III Kent Com. 44; 1 Daniel's Negotiable Instruments, 4-5; Chitty on Bills, 11; Story on Bills, Secs. 5-11; 2 Bl. Com. 467. +Tiedeman, Com. Paper, Sec. 3; Daniel's Neg. Inst. 8.

tions to pay money at an early day, were not recognized as negotiable by the courts until inland bills of exchange began to be used, and were then confounded with inland bills. As a result of the opposition of Lord Holt, who declared in Clerke v. Martin (2 Ld. Raym. 757), “that the maintaining of these actions upon such notes were innovations upon the rules of the common law, and that it amounted to setting up a new sort of specialty unknown to the common law, and invented in Lombard Street, which attempted in these matters of bills of exchange to give laws to Westminster Hall," it became necessary to settle the matter of the negotiability of promissory notes by statute, as Lord Holt repeatedly denied that they could be declared upon as an inland bill under the custom of merchant.* By the statutes of 3 and 4 Anne, chapter 9, and 7 Anne, chapter 25, promissory notes were declared negotiable in England the same as bills of exchange.†

*See Buller v. Crips, 6 Mod. 29; Grant v. Vaughan, 3 Burr. 1525.

†By the statute of 3 and 4 Anne, ch. 9, it was enacted: "That all notes in writing that shall be made and signed by any person, etc., whereby such person, etc., shall promise to pay to any other person, his, her, or their order, or unto bearer, 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, etc., to whom the same is made payable; and also every such note payable to any person, etc., 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, etc., to whom such sum of money is or shall be by such note made payable, shall and may

In the United States similar statutes have been enacted in the various States, and the negotiability of any note depends, it would seem upon the statute having been complied with. But it is held by many authorities that promissory notes are negotiable independent of any statute by the custom of merchants, the contrary is also maintained by other authorities.*

Sec. 748. PURPOSE ANSWERED BY NEGOTIABLE INSTRUMENTS.-"Negotiable contracts were introduced in modern times for the benefit of commercial intercourse. They are designed to circulate readily from hand to hand, and thus multiply the facilities of traffic and credit." Professor Tiedeman states that the development and extension of commerce outgrowing the limited supply of money, as well as the danger from loss by robbery and destruction in the trans

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, etc., who signed the same; and that any person, etc., to whom such note that is made payable to any person, etc., his, her, or their order, is endorsed 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, etc., who signed the note, or against any of the persons that indorsed the same, in like manner as in cases of inland bills of exchange."

*Irwin v. Maury, 1 Mo. 194; Dunn v. Adams, 1 Ala. 527; 1 Parson's N. & B. 13, hold that they are negotiable independent of statute; while Davis v. Miller, 14 Gratt. 18; Morton v. Rose, 2 Wash. (Va.) 233, hold the contrary.

Walker's Am. Law, Sec. 180.

portation of money, led to the invention and use of a representative of money-commercial paper-which possesses the characteristic of money in that it passes current and thus becomes a medium of exchange. It was the demands of commerce, he believes, that induced the courts to extend to commercial paper the character of money, and that this exchange quality is what distinguishes commercial paper from other instruments of indebtedness.* This contention is strengthened, if not proven, by the fact that as commerce and trade developed new forms of commercial or negotiable paper were invented, and this process of adding to the variety of instruments possessing the quality of negotiability has not ceased at the present time, though over nine-tenths of the volume of business is estimated to be conducted by this paper medium of exchange.†

Sec. 749. KINDS OF NEGOTIABLE INSTRUMENTS.-At common law, the first instrument recognized as possessing negotiable qualities was a for

*See Tiedeman, Com. Paper, Sec. 1.

†This development of a paper currency in the face of the wise (?) policy of financiers and economists, who demand a money unit with intrinsic value equivalent to its face value, affords a striking example of the way in which the needs of trade and commerce force a modification of the law in the very teeth of the money sharks whose greed demands the limitation of the volume of money. Were it not for this commercial mint, in which untold millions of a practical and business-like exchange medium can be created independent of the gambling of the money sharks, humanity would long since have expired with a last quiver upon the "cross of gold!"

eign bill of exchange, which came into vogue and was sanctioned by the custom of merchants. This was followed by inland bills of exchange, and inland bills by promissory notes, whose negotiability was settled by the statute of 3 and 4 Anne, chapter 9. By State statutes, bills, notes and bonds are made equally negotiable, and in addition to these forms of negotiable instruments, checks, drafts, bank notes, coupon bonds, bills of lading, warehouse receipts, and letters of credit have been developed with all or some of the features of negotiable instruments.

Sec. 750. BILLS OF EXCHANGE DEFINED. -A bill of exchange is defined by Blackstone to be "an open letter of request from one man to another, desiring him to pay a sum of money therein named to a third person on his account." (2 Com. 466.) (2 Com. 466.) Later defini tions only improve on Blackstone by stating that the request must be unconditional, and the amount payable absolutely and at all events.*

Bills of exchange are either foreign, or inland. By a foreign bill of exchange is meant one drawn in one coun

*Thus in Byles on Bills, 1, it is said, "a bill of exchange is an unconditional written order from A to B, directing B to pay Ca sum of money therein named." While Mr. Daniel defines a bill of exchange as "an open letter addressed by one person to a second, directing him, in effect, to pay absolutely and at all events, a certain sum of money therein named, to a third person or to any other to whom that third person may order it to be paid; or it may be payable to bearer or to the drawer himself." (1 Daniel's Neg. Inst. 35. See also, Bayley on Bills, 1, and Tiedeman, Com. Paper, Sec. 2.)