on the great mischief which would result from the denial of their merchants in London, to be informed of the mighty ill consequences that it was pretended would ensue by obstructing this course; and that they had told him it was very frequent with them to make such notes, and that they looked upon them as bills of exchange, and that they had been used for a matter of thirty years, and that not only notes, but bonds for money, were transferred frequently, and indorsed as bills of exchange." (n) See preceding note. (0) 1 Bl. Com. 75, n. This question is fully considered in 1 Cranch, 367, Appendix, n. A, in a learned note by the reporter. And see Irvin v. Maury, 1 Misso. 194; Dunn v. Adams, 1 Ala. 527, where it was held that promissory notes were negotiable, independently of the statute of Anne. VOL. I CHAPTER II. OF PROMISSORY NOTES. SECTION I. DEFINITIONS. A PROMISSORY Note is, in its simplest form, only a written promise. Almost always, however, it is a promise to pay money. He who promises signs the note; and the promise is made to a specified promisee, or to him or his order, or to the promisor or his order, or to bearer or holder. The promisor is considered as making the note, and is called the maker. The promisee is called the payee. Where the promise is to pay to a specified payee, without further words, the note is not negotiable. Such a promissory note is little more than evidence of indebtedness, although there are some rules of law which are peculiar to this instrument. These we will consider hereafter. At present, we speak particularly of a note made payable to order; it may be to the promisor or order, (p) to the promisee or order, to the order of the promisor, or to the order of the promisee; (g) in either case, and equally, it is a negotiable note. The word "negotiable," from the Latin word "negotium," (p) See post, p. 18, note v. (9) It seems to have been once a matter of doubt whether a note payable to the "order of A. B." was entirely equivalent to one payable to " A. B. or his order," it being objected that in the former case no one but an indorsee of A. B. could sue upon the note, and that A. B. himself could not, at least without indorsing it to himself. But it was long since settled, that a bill or note payable to a man and his order, or to his order only, is one and the same. See Fisher v. Pomfret, 12 Mod. 125; -v. Ormston, 10 Mod. 286; Frederick v. Cotton, 2 Show 8; Smith v M'Clure, 5 East, 476. In this last case Lord Ellenborough said: "A bill payable to a man's own order was pay. able to himself, if he did not order it to be paid to any other." And see Sherman Goble, 4 Conn. 246; Huling v. Hugg, 1 Watts & S. 418. which is adequately translated by "business," is given to notes of this description, because they derive from this word "order" the capacity of entering into commercial business as an instrument of the greatest importance. By far the greater part of the business of this country is done by means of them. The reason why, by the use of this word, they become this instrument, is, that if A promises to pay B, no one but A and B are parties to this contract; no one else can become a party to it, so as to enforce it in his own name, in the same way, and with the same effect, as if he had been an original party. A note which is not to order, or not negotiable, can be transferred, and the new owner collect it in a certain way and under certain circumstances, which will be hereafter considered. But if the note be payable to order, it is a very different instrument. Then, A promises not merely to pay B, but either B, or, at B's election, such other person as B may order A to pay the note to. Therefore, when B orders A to pay the note to C, it follows that C may claim payment as if the note had been originally payable to himself, or, in other words, C stands fully in the place of B. And if B orders A to pay the note to C or his order, then C has the same power of substituting another that B originally had, and this substitute may have the same power, and this indefinitely. This order is regularly made by writing on the back of the note; or, in the language of the law merchant, by indorsement. It was once questioned whether the negotiability of a note, created by the use of the words "or order," was not exhausted by the first order given; that is, by the first indorsement. It is now, however, well settled, that these words give to a bill or note a permanent negotiability, so that an indorsement gives to any indorsee the right of further indorsement, and the same to his indorsee, and so on, indefinitely; and therefore these words "or order" never need to be repeated in the indorsement. (r) (r) This was first decided in More v. Manning, 1 Comyns, 311. That was an action of assumpsit upon a promissory note, made by the defendant, and payable to one Statham and order; Statham assigned it to Witherhead, and Witherhead to the plaintiff ; and upon a demurrer to the declaration an exception was taken, because the assignment was made to Witherhead, without saying to him and order, and then he could not assign it over; for by this means Statham, who had assigned the note to Watherhead, without subjecting himself to his order, would be made liable to be sued by any subsequent indorsee. And to this the chief justice at first inclined, but afterwards it was re It has even been doubted whether an indorser can, by a restrictive indorsement, limit or prevent indorsement by the indorsee. (s) It is, however, now quite clear, that indorsements may be made restrictive, in any way that the indorser pleases, by the solved by the whole court that it was good. For if the original bill was assignable, (as it will be if it be payable to one and his order,) then he to whomsoever it is assigned has all the interest in the bill, and may assign it as he pleases." A few years later, in Acheson v. Fountain, 1 Stra. 557, it appeared that the plaintiff had declared upon an indorsement made by William Abercrombie, whereby he appointed the payment to be to Louisa Acheson or order; and upon producing the bill in evidence, it appeared to be payable to Abercrombie, or order; but the indorsement was only in these words, "Pray pay the contents to Louisa Acheson"; and therefore it was objected that the indorsement, not being to order, did not agree with the plaintiff's declaration. But upon consideration, the whole court were of opinion it was well enough, that being the legal import of the indorsement, and that the plaintiff might upon this have indorsed it over to another, which would be the proper order of the first indorser." But the question was not set at rest until the case of Edie v. East India Co., 2 Burr. 1216. That was an action upon a foreign bill of exchange, drawn upon and accepted by the defendant. The bill was payable to one Campbell or order, and. was indorsed by him to one Ogilby, and by Ogilby to the plaintiff. The indorsement to Ogilby was without the words "or order"; and it would seem from the case that it was made to him as the agent or servant of Campbell, and without consideration. After the indorsement to the plaintiff, Ogilby became insolvent, and the question was, whether the plaintiff or Campbell should bear the loss. Upon the trial, Lord Mansfield permitted the defendant to put in evidence as to the usage of merchants. Whereupon the cashier of the Bank of England testified, "that the bank, if they ever discounted the bills not indorsed to order, did it only upon the credit of the indorser; but that otherwise they would not take them, not considering them as being negotiable." Another witness testified that an indorsement without these words was restrictive to the particular person specified in the indorsement, and was merely in the nature of a personal authority to receive the money. On the other hand, a notary-public, called by the plaintiff, testified, that a bill was negotiable, notwithstanding the omission of these words, and that no objection of this sort was ever made. Indeed, if the bill should be indorsed, 'Pay the contents to A. B. only,' it was looked upon to be a restriction of the payment to A. B. personally." His Lordship instructed the jury, that, by the general law, (laying the usage out of the case,) the indorsement would follow the nature of the original bill, and be an absolute assignment to the indorsee or his order; but upon the evidence of usage, he left the question to the jury, who found a verdict for the defendant. Upon a motion for a new trial, the whole court held that the evidence of usage ought not to have been received, because the law was settled by the two cases cited above. And upon the merits of the question, Lord Mansfield said: "A draught drawn upon one person, directing him to pay money to another or order, is, in its original creation, not an authority, but a bill of exchange, and is negotiable. It belongs to the payee, to do what he thinks proper with it, and to use it as best suits his convenience. It is his property: and he may assign it as such, and to whom he pleases; and his direction to pay it to such a one,' is a direction 'to pay it to him or his order'; for he assigns his whole property in it, and has had a valuable consideration for so doing." (s) Thus, in Edie v. East India Co., 2 Burr. 1216, 1226, Wilmot, J. said: "There is a great deal of difference between giving a naked authority to receive it and transfer We shall consider this use of express and definite terms.(t) If the note be made by A and be payable to A's own order, there is then no payee or promisee, until A orders himself, by an indorsement in blank, or by a special indorsement to pay the note to B or C or some one else; then the person to whom payment of the note is thus ordered to be made becomes the payee or promisee, in like manner as if his name had been originally inserted. Such a note indorsed in blank is equivalent to a note payable to bearer. (u) If a bill be drawn on the drawer, payable to the drawer or order, the drawer may accept it, and indorse it, and thus hold all these relations to an indorsee. We apprehend that bills are seldom so drawn, but notes are very frequently made payable to the maker's own order, and indorsed by him. Indeed, in some of our larger cities, the majority of notes given for goods are made in this way. The reason is obvious. One who receives such a note may sell it, or offer it for discount, without adding his own name so as to be liable as an indorser; and without adding his name together with the words "without recourse," or any other which would cast suspicion. For a similar reason, if a merchant in large business caused only the feeble notes which he took to be indorsed by the maker, and so made transferable without his own indorsement, this again would impair their credit. If therefore he wishes, for the reasons above ring it over by indorsement. And I doubt whether he can limit his indorsement of it by way of assignment, or transfer to another, so as to preclude his assignee from assigning it over as a thing negotiable. For the assignee purchases it for a valuable consideration, and therefore purchases it with all its privileges, qualities, and advantages, one of which is its negotiability. To be sure, he may give a mere naked authority to a person to receive it for him; he may write upon it, Pray pay the money to my servant for my use '; or use such expressions as necessarily import that he does not mean to indorse it over, but is only authorizing a particular person to receive it for him and for his own use. In such case, it would be clear that no valuable consideration had been paid him. But, at least, that intention must appear upon the face of the indorsement. Whereas here no such thing, nor anything tending to it, appears upon the face of the indorsement; it is a general assignment without any restriction at all." And see, per Tindal, C. J., in Cunliffe v. Whitehead, 3 Bing. N. C. 828; Gay v. Lander, 6 C. B. 336; Rice v. Stearns, 3 Mass. 225. As if the payce indorse, "Pay the contents of the within to C. D. only." (t) See Sigourney v. Lloyd, 8 B. & C. 622, 3 Man. & R. 58, 5 Bing. 525; Treuttel v. Barandon, 8 Taunt. 100; Snee v. Prescot, 1 Atk. 245; Ancher v. Bank of England, 2 Doug. 637. (u) Hooper v Williams, 2 Exch. 13. VOL. I.-B |