L UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY <^' ^ jM- A TREATISE ON THE LAW OF BILLS OF EXCHANGE, PROMISSORY NOTES, AND LETTERS OF CREDIT IN SCOTLAND, By WILLIAM GLEN, Writer, Glasgow. EDINBURGH: Prinrcd htj D. WilUson, FOR ARCHIBALD CONSTABLE & CO- EDINBURGH; And sold by A. WILSON, BRASH &. RFID, D. NIVEN & CO. J. STEVEN & CO., OEORGE lUivlSULN, A, MOLLISON, AND A. & D. SCOTT GLASGOW, 1807. T \'^ ^u ^^'^ M-' ^ N^ To THE MERCHANTS OF GLASGOW, THIS WORK IS HUMBLY INSCRIBED^ BY THE AUTHOR^ PREFACE. Jl HE following worlc was undertaken, from a consi- deration that it might be useful to the commercial part of the community, to have the law and authori- ties relative to bills of exchange collected and st \ted in a form to which all might have access. For above a century past, the trade and manufactures of tliis country have been advancing Math rapid strides ; ;'ad bills have come to be so generally employed in all mercantile dealings, that they may be said to ha^re in a great degree superseded the use of cash. It is high- ly necessary, tlierefore, that every person should in some measure be acquainted with the laws established with regard to these documents. From the number of questions that have occurred, and which have been ultimately determined by the Supreme Court of the kingdom, a great mass of de- cisions has been reported ; and as the law might be considered as ascertained in so man/ cases, the sub- ject, as a branch of tlie commercial iurisprudence of the country, being obviously susceptible of the form, seemed VI PREFACE. seemed to be entitled to the rank, of a separate trea- tise. As this might be accomplished by a proper se- lection and arrangement of the materials, the autlior conceived that he could not better employ his leisure hours, than in endeavouring to collect the authori- ties from the different volumes of decisions, and to reduce them, along with the information derived from odier sources, into something of a systematic shape. Ft is perhaps somewhat singular, that although, in England, there is a great variety of treatises on bills» no recent attempt of the kind has been made in this, country, where bills arc peculirirly ir.terwoven with many parts of the municipal law, so as to hold a ve- ry interesting and conspicuous station. The onlyr work on the subject is that of Mr Forbes, Professor of Law in the University of Glasgow, which was •written and published about a liundred years ago ; a. performance unquestionably of merit in its day, and displaying considerable erudition, but which is now rather obsolete, both in matter and style. In treating the subject under different distinct heads, in the natural order of the constitution, trans- ference, and extinction, of the bill, it was scarcely possible to avoid some repetitions ; but the charge of redundancy was rather chosen to be incurred, than that of being uncxplicit or obscure. Many disputes having PREFACE. vli having arisen from an ignorance of, or inattention to, the necessary requisites of bills, the author has been particularly full on that part of the subject. To pro- fessional men, the details into which he has entered may appear unimportant or unnecessary ; but it is to be remembered, that the work is in a great measure calculated for classes of the community who have not the same opportunities of acquiring information that they have ; and, by the candid, this will be admit- ted as a sufficient excuse. But even to professional men it may be of service, inasmuch as it may tend to point out cases, and direct their attention to authori- ties, which they may wish to consult. It is therefore hoped that the work will be found to be of some utility ; but, whatever may be its re- ception, the author will at least have the satisfaction of reflecting, that his researches have been accompa- nied often with amusement, and generally with some improvement to biniself. CONTENTS. Page Introduction - - . - - 17 Chap. I. Descrlptioti and Form of Foreign and Inland Bills and Fromissorif Notes - - - - 35 Chap. II. Of the Competent Parties to Bills and Notes - 55 Chap. III. Of the Requisites of Bills - - - - 67 Chap. IV. Of Acceptance - - - - ^ 107 Chap. V.' Of Indorsation - - - . 131 Chap. VI. Of Payment 151 Chap. VII. Of Protests -- - - - - 171 Chap. VIII. Of Negotiation - - • - - i$i CONTENTS. page Chap. IX. Of the Privileges of Bills - - - - 205 Chap. X, Of tlie Action and DUigeiue on Bills - - 233 Chap. XI. Of PrescrijJtion - - - . . 249 Chap. Xlf. Of Bills in Relation to Bankruptcy - - 269 Chap. XIII. Of Letters cf Credit - - - - 311 APPENDIX. No. I. Additional Forms of Bills Foreign and Domestic. No. II. Table cf Stamp Duties exigible on Bills and Notes. No. III. Forms of Protests ^ and of the Acceptance supra Protest. ERRATA. p. 32 Note, for coresponding, read corresponding. p. 51. Note, for § 56, read § 36. p. 79. End of Note' read, " i8co, Allan a. Toung, Fjc. CoU. No. iy«. p. 388 " omitted. p. 109. Note* for Gordon a. 'James, read Gordon a, Innis, p. 134. Line 15. from top, for tbu. read his. p. 140. N9««' iox mtgUittlt read it^otiaUi' INDEX OF CASES. A. a. B. Page 83 A. <2. B. - - 148 A. fl. B 244 A. fl. B. 246 Adam a. Johnftcn - - _ - _ 517 Adam a. Dick - - - - - - 182 Ainflie a. Arbuthnot ----- 61 Allan a. Young .-.--. Errata Andrew a. Syme - - - - - 109 Anderfon a. Turnbull - - - - -2i8 Arbuthnot a. Newgrange - - - - 220 Arbuthnot, Vifcount, a, Douglas - - - 253 Armftrong u. Johnfton • - - - 266 Arthur a. Oldcorn - - - _ - j66 Auchinleck a. Miller - - - - 134 B Baines a. Turnbull - - - - - 62 BaiUie a. Doig - - - - - - 262 Baird a. Murray's Creditors , - - . 295 Barbour a. Blackwood & Hair - - - 97 Batchin a. Orr - - - - - 1 yo Baynton & Shaw a. Swinton - - - 242 Boick a, Blackwood - - - - - 1 60 Bolton X INDEX OF CASES. Bolton V. Fuller, Sec. . . - Pa^g 294 Borland a. Tiiiftle Bank .... ijJJ Bowack - 78 Bonr.ar a. Grar.t - - - - - 82 Brand a. Anderfon ----- iliiif. Brodie, &c. ^. Gordon - - - - 64 Brown a. Jolinfton - . - - - 85 Brown a. Hume - - - - 117 Buchanan a. Duncan . - - - 86 Buchan a, Barclay - - - - _ 2^^ Burnet a. Ritchie ----- rj^ Bruce a. Wark - - - - • '69 Campbell a. Campbell - - - . fo Campbells. Campbell - - - - 116 Campbell a. Campbell . - - - 2^^ Campbell a. Armour ----- 1^3 Campbell a. Cockburn . - - - 169 Campbell a. Grahame . . - - . 2I59* Campbell n. Lennox - - . - ^13 Campbell a. the Creditors of the York Buildings Com- pany - - - 1 15 Campbell tf. M 168 Golebrooke & Co. a. Douglas - - 205^ Connell .7. MacLelland . - - 6 r Cooper a, Clark - - - - 197 Coulter a. Martin - - - 201 Coutts & Co. a. Nifbet - - - 204 Corrie a, Callendar - - - 137 Craig a. Grant - - - - ^g Crawford a. the Royal Bank - - 218 Crichton a. Gibfon - - -- 'j(j Crichton & Co. a. Jack - - - 319 Cruickflianks /7. Mitchell - - - 171 Cullen's Attorney a. Philp _ . 9^ Cunningham a. Agnew - - - 165 Curtis a, Chippendale - - - 301' D Dalgliefli & Co. a. Sorley - .65 JDewar a. Millar - - - 64 Dewer a. Millie - - - 96 Donaldf^on a. Fulton - - - nc Douglas Heron & Co. a. Alexander - - 203 Douglas & Lindfay (?. Brown - . 75 Douglas a, Elliot - - - ij.2 4 Douglas XU INDEX OF CASES. Doujrlas a. Eif].iiic ... Pa^e 68 Doiiwlas Heron i<. Co. a. Grant's truf /^es • 251 Douj^Ias a. Logaii - - - 82 Douglas Heron & Co. a. Richcrclfon - 2? I Drunmond a. Credtors ot Druininoiid - 82 Dn.mraond a. Grahame - . -75 Dun .7. CoUioun - . - 80 Duncan a. King's Advocate - - 206 Duncan a. Tbomfon - - - 04 Duiidonald, Earl, n. Watfon - - oi* Duiiwoodie a. Johnfton - . g^ 190 321 221 245 211 Fair a. Cranftoun 5- Fairliolras - - . . . . -i^c Fairholm a. Ccickbum . . - . -136 Fairholm a. Gordon . . _ . . 2 n Pairholms a. Sunfire OfTice - - - . iq^ Falls a. Porterfield ,00 Farqiihar a. Shaw - - - - . 206 Fcrrulon a. Blair " - - - - 84 Ferp[ufon & Co. a. Belch . - . .g- Fergiirr.p. rt. M.Icolm - - . - 112 Fergufon a. Young . . . . ,5^ Finla)'ibn Elliot a. Bell Elliot a. Home Elliot a. Mac Kay Elliot a. R'chardfon Ewing a . Burnet Ewing a . GeiUs INDEX OF CASES. xlii Finlayfon «. Ewing _ - . Pt'ge 114 Flower /7. Priiigle - - - - 182 Forbes a. Fonnereau - - - "99 Forbes fl. Young - - - - 134 Forreft a. Earl of Sutherland " " " 55 Fulton & Co. a. Clark _ - - - ^5 Fulton a. Johnllon - - - " *37 G Garnock, Vifcount, a. Duke of Queenfberry - 70 Gavin a. Kippen - - - - 3 1 1 Gibfon a. Campbell - - - - 72 Gibfon a. Wilfon - - - - 63 Gilhagie a. Orr - - - - 58 Glendinning's Creditors fl. Montgomery - 177 Good V. Col - - - - 153 Goodfellow a. Madder - - - 123 Gordon a. The King's Advocate - - 74 Gordon a. Anderfon - - - - - 127 Gordon a. Bogle - - - - 252 Gordon a. Campbell - - - 258 Gordon a. Pain & Hufband - - - ^6 Gc-don a. Sutherland - - - - 64 Grahame a. G'llefpie & Co. . - - - 77 Grierfon a. Suth rland . - - pg Grierfon a. Earl of Sutherland - - - 142 Grieve a. Tait - ' ' ' 59 H Hamilton rt. Carliflc, &c. - - ' Z^5 H?pii1ton a Dalrymple - - - - 68 Hammett v. Yea - - - - 90 Harris & Co. a. Crofby - - - 223 Harrifons a. Chippendale - - - 60 Harvie XIV IN1>EX OF CASES. Harvie & FawcU a. Truftees of Cheflels Hart a. Glafsford Hawkins & Co. a. Cochran Jiay i'- Sinclair Henderfon a. Davidfon Henderfon a. Duthie Henderfon a. Hay Henderfon a. Sinclair Herries - - , . Hill a. Menzies & Andeffon's Truftees Hill a. Scott Hodgfon & Donaldfon a. Bufhby Hogg a. Frafer Hope a. Neilfon Howifon a. Howifon Huttons a. Hutton Pa*t 56 196 204 271 84 187 79 73 244 194 64 186 214 68 255 96 Jamiefon a. Gillefpie Jarron a. Smith Inghs a. Wifeman's Reprefentatives Innes a. Flockhart Johnfton a. Hogg John (Ion a. Maiiland Johnfton a. Murray Irvine a. Cadell Irvine a, Menzies »74 38 71 76 199 59 163 200 22r K Kamcs a. Anderfon Keith a. Grant Kennedy a. Arbuthnot Kerr a. Brown Ker ion, arid fotjnd evptnfes due. The cafe having been brcutjht by reprefcntation before the CcOrt, they (appa- rently on the ground that bills blank in the drawer's name have, by the later decifions, been fufiained) altered the jiirisn"ent of the Ordi- nary ; found the letters orderly pmceedcd ; and decerned againil the indorfer for the fnm in the bill. A reclaiming petition againfl this ftntence has hien prelentcd, upon wiiich no final decifion has yet been given. It was alfo f:paratim pleaded by the indorfer, that the bill was not (Itidtly negotiated, no notification of the difhonour having hrAn given till t\wg-and-twenty days after the prctfft. Jt was admit- ted ADVERTISEMENT. teJ that, before the bill became payable, a letter had been fcnt to tlie indoHcr, informing him that it fell due on a certain day, and de- firing him to attend to it ; but this, he contended, was not tantamount to a regular notification of dilbonour, bccaofe the bill might have been retired by the accepter. Macdougal a. Davidfbn. 5- A perfon drew a bill for 14CI. upon his debtor, payable to him- fclf or order, three months after date, which h« fubfcribed as drawer. This bill he fcnt to the debtor for acctptancc. About fifteen months afterwards, he brought an adlion againft the debtor for payment of his account, amounting to 147!., which the debtor faid he had no ob- icftion to pay, upon being allowed deduction for 140I., the amount of a retired bill in his pufTtflion, which he produced with his name icored. The creditor urged, that he had indeed fcnt fuch a bill for ace :prance, but that it had never been returned to hJm accepted ; and that this was one reafon of his demanding payment of the full fum dae to him. The debtor, on the other hand, alleged that he had paid the bill, which had been drawn for a part of the debt ; that as a retired dccnment in his hands, it was probative of its amount ; and that the prcfumption of payment thence nrifing, could only be redar- gued 1 y a ronirary proof. To this it was rejoined, that the circum- Itance, of the bill being in the accepter's hands, did not, under the ether c;rcumftances of the cafe, amount to a prefumption of its hav- ing been paid, efperially as there was no indorfement by the drawer, or receipt of payment on the bill, or elfcwhere; and that it was incum- bent on the accepler to prove that the bill had been in the pofiiflion of the drawer after accept;ince. The question therefore is. Whether or rot an accepted bill, in the cuftody of thf accepter after it is due, but without any receipt ir indorfjtion up'^n it, ?;lords a fufficicnt pre- fumption of its having beta ptiid by him r — which question the Court has not yet determined. Cuthill a. Ofwald. JNTRODUCTiONo JBiLLS OF EXCHANGE are universally acknowledged to be the most useful instruments of commerce ; nor is it easy, in the present day, to conceive how an extensive trade could be carried on without them. In a com- mercial country, it might appear an object of rational curiosity, to trace the history of any of those causes, to the operation of which, trade in general may have been indebted for its prosperity and advancement. But the origin of bills of exchange is involved in con- siderable obscurity J and it is not very well ascertained whether the invention is attributable to the ancient or modern world. In the rudest stages of society, it is natural to suppose that the limited traffic of mankind was carried on by barter, or a direct exchange of commodities. But the inconvenience and inadequacy of this, must soon have taught them the necessity of adopting some common standard of value. It is probable, that those A com- 18 INTRODUCTION. commodities which were of most current disfiosal, or in greatest request, were at first used as a measure of tlie exchangeable value of others. In early times cattle seem to have been a common instrument of commerce ; and in Homer, the price of armour is esti- mated by the number of oxen which it cost. In pre- ference, however, to CA'ery other commodity, men ap- pear in all countries to have soon given a decided pre- ference to metals as a medium of exchange. Iron performed the function of money at Lacedemon, and copper among the first Romans ; but, in richer cottTi- tries, the precious metals superseded all others. We find that gold and silver were used, at a very remote period, as a representative of value, not merely in bul- lion, but as current money. Abraham weighed to Ephron four hundred shekels of silver, current money with the merchant, for the field of Machpelah\ The shekels are here said to have been received by weight ; but it Is pretty evident they were a coined money : for, among the same people, it is afterwards repre- sented that, to facilitate the offerings to the tabernacle, they were furnished with half shekels and smaller coins, to purchase sheep, doves. Sec. for the sacri- fices *. And at any rate, the transition is obvious from the use of the precious metals in bullion as a medium of exchange, to the erection of mints, and the institu- tion ' Gen. ch. 23. V. 16. Exodus, ch. 3c. and 3^. JNTRODUCTION. 19 tbn of coins, by whith thfe weight and fineness of th* metal is ascertained ' . But, as the carriage and transportation of specie from one country to another, must have been liable to many accidents, and attended with considerable dan- ger, the adoption of bills of exchange, would appa- rently be a necessary consequence of extensive com- mercial dealings ^ ; as, by their aid, tlie value of money may be transmitted without risk, from the most distant quarters of the globe. It might be thought, therefore, that, like many other excellent mercantile expedients, which necessity and experience seem gra- dually to have suggested, the use of bills must soon have occurred to any people in the habits of frequent and established intercourse with other countries, the communication between which and their own was in ■any degree exposed to difBculty or peril. Almost all the French ^ and English writers on the subject, * Wealth of Nations, v. i. p. 38. ■* Molloy de Jure Maritimo et Navali, v. 2. b. 2. c. 10. ^ Savary concludes his Inquiry * de I'Origine du Contrat de Change de place en place par Lettres, * in this categori- cal manner, ' Ce chapitre ne fournit qu'une maxime. * Maxime. * Le contrat de change n'a pas etc connu par I'anciens. * L'Art des Lettres de Change, ch. 2. Montefquieu exprefsly afcribes the invention to the Jews in the middle ages. ♦ lis (les Juifs) invenfereni ]es lettres A 2 de 20 INTRODUCTION. subject, however, agree in this, that bills of exchange are of modern origin. Few traces of bills are indeed to be met with in antiquity ; but Boucher, in his Commercial Institutions ^ is of opinion, that the an- cients must have been acquainted witli the exchange contract, whether the proper bill of exchange, as the instrument by which it is accomplished, was known to them or not. * In the history of the commerce and navigation of the Egyptians, ' says he, * we find, that when the young Hyrcanius travelled to Alexandria, to congratulate, in behalf of the Syrian nobility, king -Ptolemy Epiphanes, on the birth of a son, his father Joseph gave him a letter on his correspondent, a Jewish merchant there, who advanced him consider- able sums, as well for his own expenditure, as for the presents made by him to the king and queen of Egypt. It is to be presumed, ' he adds, * that on this transaction the Jewish merchant would have a premium of exchange, and a commission correspond- ing de change ; et par ce moyen le commerce put eluder la violence, et fe maintenir partont : le negociant Ic plus riche ii'ayant que des blens invifibles qui pouvoient etre envoyds partout, et nc laiffoicnt de trace nullc part. ' De L'Efprit des Loix, Liv. 21. ch. 20. Pothier obfcrvLS, « Qu'il ii'y a aucun veftige de notie contrat de change, ni des lettres de change dans le Droit Remain. '— Traites de Droit Civil, tit. dn Contrat de Change, n. 6. — Dupuls de la Serra, Sec. " Iflftitutions Commerciales. Paris, 1801. l-NTRODUCTION. 'S'l 4ng to the expense and risk of transmitting the money into such a country as Egypt, which was then infested with robbers \ ' Cicero too, informs Atticus, ^ that ' being desirous of sending his son to Athens, he meant to spare him the trouble and necessity of carrying the cash for which he miglit have occasion, by arranging with some one at Rome who would charge himself with order- ing payment of the money, by one or other of his debtors at Athens. ' Pothier remarks, that this was more of a simpL? mandate, than of a bill of exchange,; but the learned professor has himself defined a bill of -exchange to be a mandate ; and the mandate by whicli Cicero transmitted the value of money from Rome to Athens, must have been something analogous to the ■exchange contract, as the difference in the value of money in the two places, if not the rate of exchange, rtust have entered into the transaction. There is, no doubt, this essential difference, that the contract of mandate is gratuitous in its nature, and the mandate cannot be transferred by the mandatary -, whereas, the mandate by which the contract of exchange is exe- cuted, is both transferable in the way of negotiation, and is not always gratuitous. But it has been evinced in a pretty satisfac- A 3 tory ' Chap. 2 1. p. 193. ^ Epifl. ad Att. xii. 24 — xv. 25. 82 INTRODUCTION. tory manner, by an ingeiiious writer, in his philo- sophical dissertations on the Greeks, that even the proper bill of exchange, as a mode of transferring pro- perty, and making remittances in p::yment of commo- dities, was known to the Athenians in their mercan- tile operations. In treating of the commerce and finances of Athens, and describing the trude carried on by that city with the ports of the Taurica Chersonesus, which we now name tjie Crimea, the following pas- sage occurs, which, as it is curious, deserves to hi; transcribed. * In short, Theudosia (one of the ports) was, in the time of Demosthenes, the grand entrepot of the com- merce of the Athenians in the Crimea i and they exported from it, in the course of a few years, an al- most incredible quantity of grain. As the Black Sea is extremely stormy, and the straits of the Pro- pontis strewed with rocks and shoals, many cargcjs were lost in so long and perilous a voyage. Besides, in time of war, it was necessary to have armed squa- drons to convoy the vessels which transported the harvests of the Peninsula to Attica ; and this was at- tended with a double expense, that exhausted the riches of individuals and the public treasure. * It is in the operations of this commerce, that we iind the first notion of Bills of Exchange i and Iso- crates says in the clearest manner, that a stranger who had brought cargoes of grain to Athens, gave t© INTRODUCTION. 23 to » merchant there named Stratocles, a bill of ex- change drawn upon some place in the Euxine Sea where there was money owing him. He to whom the bill was delivered found it of the greatest bene- fit ; for he had no occasion to expose his fortune upon a sea swarming with pirates and Lacedemonian privateers, which lay in wait to capture every vessel that came out of the ports of Attica. * It may therefore be said, that it was at first the <,langers of the sea, and afterwards the dread of cor- sairs, or declared enemies, whi^rh inspired merchants with the idea of such an operation. As the credit of the Greeks, however, was in little repute, this Stra- tocles, of whom we were speaking, took very good precautions : for he required, as security, a banker of Athpns, -upon whom he might have recourse, in case his bill was protested in the Crimea, inasmuch as he who had drawn it was at that time without any f xed residence. ' ' But ' Do Pauw, Recherches Philofophiques fur les Grecs, torn. I. p. 2. ^ 5., and Demofthenes, Ifocrates and Stra- bo, there quoted. Even at prefent, the trade carried on with the Ruffian ports in the Black Sea, labours under a confiderable difadvantage, from the want of a fixed ex- change. Moft of the fhips going to Odefla and Tagan- rock, are obliged to cany fpecie, viz. Venetian fequins, Dutch ducats, or Spanifh dollars, which are purchafed, at no fmall exncnfe, at Conftantinople or Smyrna, This mo- A 4 ney, t4 IWTfiODVC-tiOtt, But it must be acknowledged, that if the ancient? were at all acquainted with bills of exchange, it must have been in a very limited degree ; for scarce a ves- tige of them remains in history ; and if these instru- ments were known, it is somewhat unaccountablef that they were not introduced into more general ug6 than they seem to have been. No authentic record is extant of their having been employed by the Rhodi- ans, Phenicians, Carthaginians, and other Commercial states. Nor is any notice taken of them in the fa- mous Rhodian laws with regard to navigation and maritime affairs, which were adopted by the Ro- mans ; and as they are not mentioned in the Civil law, Pothier very justly infers that they were un- known to that people. In modern times, bills of exchange appear to hava been first used, to any extent, about the end of the twelfth, and beginning of the thirteenth century, by the ney, even after the rifle of fea-carriage, muft, on arriving at the above ports, be packed up and forwarded to Mof- cow, to be exchanged for Ruffian paper money, the only money, except copper coin, which is current among the holders of produce. The lofs and inconvenience altending this mode of trafficking, independent of the rifle of tranf- mitting fpecie by a dangerous and ill known fca, is fuffici- ently evident. At times there has been a lofs of 30 per cent., and never lefs than from 15 to 20 per cent. ; which might be avoided, by an eftablifhed correfpondencc and crc dit, and the power of drawing bills of exchange. Introduction, 55 the Jews, who being obliged to make a precipitate retreat from France and England, on account of the exorbitant exactions of the sovereigns of these king- doms, took refuge in Italy, where they contrived to withdraw their property from the countries from which they had fled. This they accomplished, by giving letters to foreign merchants and travellers, ad- dressed to the persons under whose charge they had left their effects, who, by complying with the orders contained in tliese letters, discharged the trust repos- ed in them. A similar method is said to have been employed by the Ghibellins, when, driven from Italy by the victorious faction of the Guelphs, they re-* tired to France and Holland. From these countries, for certain sums advanced, they gave letters of the game description on their private friends, ordering them to pay these sums to the holders of the letters, the amount of the sums in the respective places being regulated by the value of the coin exchanged. In the course of time, these letters came to be called bills, or letters of exchange j and as many of them came back unpaid, this gave rise to the charge of re- exchange. A knowledge of the importance and uti- lity of bills of exchange was widely diffused over Eu- rope by the commercial operations of the Dutch; and they at length came to be employed in the mer- cantile transactions of all countries. The laws of exchange were established by the common consent of all 5«J INTRODUCTION. *11 trading n-uions, under the denomination of the custom of merchants ; and the privileges of bills were ascertained by a reference to these laws, which, in a short progress of time, game to be incorporated by each state with its own municipal institutipns. Exchange, as a term of commerce, is a contract of money. In this sense, says Dupuis, there are pro- perly two modes of exchange, which are lawful all over the world, — that of money against money, and ^t by t>ills. In real exchange, as it is called, there are usually four persons concerned j two at the placp where the bill is drawn, and two at the place of pay- ment. 1. The person who delivers the money, who is called the remitter. 2. The person who takes up the money by exchange, and draws tiie bill. 3. The person drawn upon, who is to pay the money. And, 4. The person to whom the money is to be paid. Thus, John of Oporto has a certain sum for wine ow- ing him by Henry of Glasgow j and James of Oporto is indebted, in an equal sum, to Edward of Glasgow;^ for muclins. Henry pays the money to Edward, who draws a h'Al on James, payable to Henry, or order. This bill Henry indorses, and remits to John, who presents it to James for acceptance, and recovers pay- ment INTRODUCTION. ?r ment from him when it becomes due. The price of the muslins is thus paid at Glasgow, and the price of the wine at Oporto. There is consequently a double accommodation to botli debtors, proportioned to the risk and expense of transmitting money from Oporto to Glasgow, ^nd from Glasgow to Oporto : And the creditors are also benefited as the payments to them are thus facilitated, and an advantage given in their future transactions with the same persons. In this inanner, by the intervention of bills of exchange, the whole goods in any two countries may be bought and sold without the necessity of any carriage, or trans- mission of specie. The commodities which one mer- chant exports, are paid by those which another im- ports ; and if the whole value of exports and imports be unequal, the balance is settled by bills on a dif- ferent country. There is another mode of drawing bills, where only three parties are interested. John at Hamburgh wishes to remit a certain sum, which he owes to Henry of Glasgow •, and having in that city Ed- ward, a debtor of his, he draws a bill on Edward for the amount, payable to Henry or his order, to whom he remits the bill in lieu of the money. This is now the most usual and prevalent method of draw- ing bills, which arises from the extended intercourse between nations in their commercial transactions. But bills may be employed in various other ways. For §$. INTRODUCTION* For instance, John in Dublin takes up money from James in that place, and gives him a bill for the a- mount on Henry of Glasgow, which James transmits to his correspondent in that city, who negotiates the bill, and receives payment of its contents for his con- stituent. Or John draws a bill on himself, payable at a certain date in Glasgow, which, being presented after his arrival there, is retired by him. Bills may also be drawn payable to the drawer, or order ; in which case, there are only two parties j but these partake more of the nature of promissory notes, than of the proper bill of exchange. When a bill is drawn in a country using one spe- cies of coin or money of a certain value, and made payable in another, using a diiFerent species, it is strictly and properly a bill of exchange. When I give 1001. Sterling, and receive a bill for 1401. Ja- maica, or lOSl. 6s. 8d. Irish currency, the exchange is strictly at par •, for that is the real and intrinsic difference betwixt the money of the two countries. Whatever is given above, is a premium ; and what- ever is given under, is a discount ; the rate of wliich varies with a thousand circumstances, and is in a per- petual state of fluctuation. The money of each coun- try, besides its positive value, possesses a relative va- lue, when compared with the money of other coun- tries ; and it is this relative value which exchange c- ctablishes. Whence it arises, tliat besides the actual value, INTRODUCTION. ^9 value, according to the difference of currencies given for bills from one place on another, an advance or premium is sometimes given, and sometimes a de- duction from the actual value is made. This rate of premium, or discount, is generally termed the ex- change between the countries, and is blended or con- founded vi'ith the proper exchange, proceeding from the different currencies. Iji the same manner, there IS an exchange, where there is no difference in the denomination of money. It is obvious, that bills drawn, to be paid in the same place or city, can pro- duce neither exchange nor reexchange between the inhabitants of that place or city ; tliey are mere do- cuments of debt, and a medium of circulation. But when bills are drawn on places more remote, though in the same kingdom, and using the same currency, they are often above what is called the money price ; and the difference between the value at which they pass, and the money price, is the rate of exchange. When the demand for payments is greater in one place than in another, the bills of tlie place where the payments are to be made, bear a premium or advanced price in all other places^ For instance, payments to be made in London, from the country towns, always exceed the payments made from it. There is always, therefore, a great demand for remit- tances to that city. The Glasgow merchant having So INTRODUCTION', a deal of money to remit to his correspondents Hi London, and few there to draw upon, plurchases bil^ on London, for which he glveS a premium above the money price, in proportion to the expense of remit- ting specie, and the scarcity of, or demand for, Lon- don paper in the market. The usual and average rate of this premium, which is permanently in favour of London, is called the par of exchange; Were the London paper in such abundance as to equal the de- mand, it would sell at the money price, which a merchant would say was below par ; and wefe it to exceed the demand, it would sell at a discount ; that is, a commission would be charged for negociating it. Glasgow paper sells exactly at the same discourrt in London, as is paid by way of premium in the mar- ket for London paper in Glasgow. In London, there- fore, the exchange is said to run against Glasgow. The premium, or bonus, however, on London bill?". Is generally enhanced by the bankers, who being al- ways desirous of having sufficient funds in the hands of their London correspondents, to enable them to draw upon them, purchase up these bills at the mar- ket price, and then sell their drafts on London at a higher rate, which is called the bank price, by which they gain a profit amounting to the difference of the two prices. In proportion to this profit, the public is, or ought to be accommodated, by being enabled S At INTRODUCTION. 91 at all times, through the channel of the banks, to draw upon London. ' Bills, besides the important service they render as a vehicle of remittance, and a medium of foreign ex- change, now constitute, along with promissory notes, no small portion of the paper currency * of the king- dom. ' For illuftrations of the doftrine of exchange, fee Efprit des Loix, torn. 3. b. 2. ch. to — Wealth of Na- tions, V. 2. b. 4. ch. I. & 3. * Paper money, which is now in fuch univerfal ufe as to have gi%'en occafion to the faying of an exalted charac- ter in England, (and the livelinefs of the metaphor could be no ;vhere more juftly appreciated), thut « we eat and drink paper, and live upon paper, ' feems to have been little if at all known to the ancients. To found a proper and fecure fyftem of paper currency, requires a fettled go- vernmeat, and an eftabliflied credit, which few of the an- cient ftates poffeffed in an equal degree with fome modern kingdoms. The great advantage of paper money, as a medium of trade, it is well known, confifts in its being a very cheap fubftitute for the precious metals, which are a very expenfive one. When the circulation is kept up by paper at home, gold and fi'lver is fent abroad, aiid profit- ably employed in foreign traffic, where a domeftic curren- cy could be of no fervice. In the continental wars in which this country has been fucceflively engaged, an immenfe exportation of bullion was neceffary to pay the foreign troops in our alliance ; and after fuch drains of fpecie, it is probable that, without a paper currency, our trade could not have been carried on to 3'2 INTRODUCTION. dom. As documents of debt, their peculiar privi- leges and facility of transference give them a ready circulation. The great payments of our foreign and domestic commerce are made by bills on London ; and a vast number of smaller bills circulate among the traders of the country, who successively indorse them to each other. ^ Bills, therefore, as a trans- missible representative of property, answering all the purposes of specie, form a cheap and convenient cir- culating medium; and, by that means, tend to promote the increase, and to facilitate the operations of the trade and commerce of the nation. Let- to the fame extent, or the national credit fupported. The Carthaginians, in their long wars, are faid to have been re- duced to fimilar expedients, and that, to tranfaft their com- merce, they employed a fiftitious money, fomething hke our exchequer bills. * Carthage, exhaufted by the large fums wliich flie was obliged to pay to her auxiliary troops, conceived the idea of fabricating, without any metal, a fpe- cies of money at leaft as difficult to forge as a London bank note. The author of the dialogue entitled Eryxias, which has fometimes been attributed to Plato, and fometimes to Efchincs the philofopher, obferves, that the Carthaginians enclofed fome unknown objcA in fmail fealed bags, which, being guaranteed by the repubhc, had among merchants a ftipulated value, corefponding exa£lly to the paper money of the moderns. ' — Rech. Phil, furies Grecs, torn. i. p. 336. For tlie operations of the Romans on their money, fee Efprit des Loix, liv. 22. ch. 11. 12. & 13. 3 Thornton on Paper Credit. INTRODUCTION. S3 Letters of Credit are intimately connected with Bills of Exchange in their origin and object. In the course of time, and in their application to mercantile purposes, some change has been introduced in their form and use. It was therefore thought proper to treat of them in a supplementary chapter. B CHAP, r>F FOREIGN AND INLAND DILLS 35 CHAP. I. DESCRIPTION AND FORM OF FOREIGN AND INLAND BILLS OF EXCHANGE AND FROMISSORT NOTES. Sect. I. Of Foreign and Inland Bills. -A. FOREIGN bill of exchange may be defined to be an open order, or letter of request, by which a per- son in one country desires his correspondent in an- other, to pay a specified sum of money to a third party, or to any other to whom that third party shall direct payment to be made. ^ He who makes out the bill, is called the draiver ,• he to whom it is ad- dressed, the drawee ; and the person in whose favour it is drawn, the jjat/ee. If the drawee undertake to pay the amount, he is then called the accepter ; and if the payee appoint another to receive the money, that other is termed the indorsee^ as the payee is with respect to him the indorser ; and any one who hap- B 2 pens ' Stair, Ina. b. i. tit. ii. $ 7.— Erfk. Inft. b. 3. tit. 2. 3S Cr lORElGN AND INLAND BILLS. pens for the time to be in possession of the bill, is- called the porteury or holder of it. The bill, before it be accepted, goes often by the name of a draft ; and, after it is accepted by the drawee, it is frequent- ly denominated his acceptance. The period of payment is either at a certain dis- tance after its date, or after sight, or at sight, or on a. certain specified day, cr on demand, according to the intention and agreement of the parties, and the distance of the countries in which they reside. Be- fore bills of exchange came to be of such varied and extensive use as in the present day, it was customary to make all the bills from one place to another pay- able after the same interval of time, which was called the usance (usage) between the countries.? Usance is the period of one, two, or three months after the date of the bill, according to tlie custom of the places be- tween which the exchanges run. ^ Double or treble usance, is double or treble the usual time, and half usance is half the time. When the usance is one o» more months, and it is necessary to divide a month, half usance is uniformly fifteen days, without regard' to the inequality of the months.'' In France, usance of ' Savary, Lettres de Change, tome i. liv. 3. ch. 5. 3 Malync, Cons, vel Lex. Meicat. part 3. c. 4. * Marius, Advice Concerning Bills of Exchange, ^9J• OF TCTREIGN AND INLAND BILLS. S7 .t)f one montli is always thirty days.* Usance between Great Britain and Hamburgh, Amsterdam, Rotter- dam, and Altona, is one calendar month from the date of the bill ; between Great Britain and France thirty Lambton & Co. a. Marlliall, &c. Fac. Coll. J^o, 132. p. 302. OF FOREIGN AND INLAND BILLS. 45 The faelHties given to commerce by the use of fo- reign bills of exchange, procured them, at an early- period, peculiar privileges in all the European states. The parties being of different kingdoms, questions concerning these bills came to be decided according to the received usages of trading nations; and the law with regard to them was, of course, derived more from the general practice of mercantile people, than from any existing civil code, or municipal regulation. From being used in carrying on foreign commerce, bills came soon to be employed in transacting the in- ternal trade of the country. But in that capacity their operation was at first much more confined than at present; and, both in England and Scotland, it was some time before they were considered as entitled to the same privileges with foreign bills. At length, however, a growing conviction of their utility in all mercantile dealings, seems to have induced the legis- lature of this country, in 1696,* to put them on the same footing with foreign bills ; and since that time, all bills of exchange, inland or foreign, have been con- sidered as possessing the same force and privileges by positive law ; and the custom of merchants relative to the one, held as applicable to the other. ^ In Eng- land, » Aft 36. § 6. Pari. Will. III. 3 1748, Tudhope a. TurnbuU, Kilkerr. (Billof Exch.) No. 16. p. 81. 46 Of foreign and inland bills. land, Inlaml bills were privileged in 1G97; — 9 and lO Will. III. cap. 17. An English inland b'H has generally three parties to it, — die drawer, ?.(;C'-r":er, and payee ; whereas, in Scotland, most of tlic inland bills have at first but two parties, — the drawer and accepter ; and they are made payable to the drawer or his order. A Scotch inland bill of this description, therefore, bears a nearer resemblance to a promissory note, than to anEnglish inland bill ; and seems evidently to have been adopted, in this country, to supply the place of promissory notes, which were not privileged till long after they Were so in England. It was looked upon more as a document of debt, than a proper bill of exchange, among merchants ; and was often used as a form of security by people not in the least connected with trade. It may be observed, in general, that no precise form or set of words is necessary to constitute a bill of exchange. Of all obligations, they have, for the sake of commerce, been most favoured by our law courts, and effect given to them in whatever shape they have been made out, provided the true nature of a bill was preserved. It is, however, advisable, in drawing a bill of exchange, that the following points be attended to, some of which are essential to its va- lidity. 1 J-/, That, in certain cases, it be on a proper stamp. 2dy That the date be correct. 2J, That the place OF FOREIGN AND INLAND BILLS. i7 place where it is drawn be mentioned. 4///, That the sum be expressed distinctly, both in figures and words, and no blank left to allow of any alteration or aug- mentation of the sum. 5th, That the time of pay- ment be clearly expressed. 6t/i, That it contain an order or request to pay. 7///, That in the case of fo- reign bills drawn in sets, each bill contain the pro- viso, that it shall only be payable in case the others are not paid. 8/A, That it be distinctly specified to whom the bill is payable, and the name properly spelled- 9M, That in all inland bills, a place of pay- ment be inserted. lOtky That, in certajn cases, value received be expressed. 11///, That, in particular cir- cumstances, it be stated whether the bill is to be paid with or without further advice. 12/^, That the drawer's name be clearly signed. Ibt/ij That the bill be properly addressed to the drawee. And, /ast/i/i That in foreign bills, it be observed that the place where the drawee lives be correctly described. All which will be better explained by the following forms. FORM 4S FORM OF FOREIGN BILLS. NM. Exchange for L. 500 Sterling. Glajgow, 6lh fdruary 1806. At ufance, pay this our firft of exchange, (fecond of the fame tenor and date not paid), to the order of Meflrs Hamilton Smith & Co., the fum of five hundred pounds Sterling, at the exchange, as per indorfe- mcnt, * value in account, as advifed by Te Mejfrs Denovan l3* Spaden,'] DaLRYMPLE & Ellis. merchants., Hamburgh. J Payable at N^ 11. London, Zth May 1807. Exch. p. L. joo. Stcr. at 34s. 8d. p. pound. Three months after date, pay this my fecond of exchange, (firft of the fame tenor and date not paid), to the order of Mr G. Van Ha- veracht, the fum of five hundred pounds Sterling, at 34s. 8d., value in account, as per advice. To Mejfn Flor X^ Co.,1 Wm. RiCUARDSON. tmrcbanti, Hamburgh.} N<'. III. L. 250 Sterling. Glafgew, "Jth April 1807. Twenty one days after fight, pay this my only bill of exchange, t« Mr John O'Reilly, or order, two hundred and fifty pounds Britifli, at the current exchange, value in account, and place it to my account, without further advice from To Mr "John B era ford A JOHN Browv. merchant, Dublin, J I3. April. Accepted, J. Beresford. FORM OF AN INLAND BILL. L. 130 Sterling. Edinburgh, ith May 1807. Three months after date, pay to me or my order, at my Ihop here, the fum of one hundred and thirty pounds Sterling, for value received. To Mr Alexander CampbellA WM. Drew. merchant, Le'.tb. J Alex. CaMPBELL.I» * As the rate of exchange of the day cannot be known till infor- mation be received from London, the bill is generally fcnt thither, and the rate marked there on the back of the bill. b For additional forms of bills, foreign and domeflic, fee Appen- dix No, r. I «F PROMISSORY NOTES* 43 SECT. II. OF PROMISSORY KOTES. 3. PROMISSORY NOTE IS a direct obligation in writ- ing, by which one person promises to pay to an- other, or to his order, a certain sum of money, "witlun a specified time, or on demand. With the exception of promissory notes admitting of no ac- ceptance, the parties to them are similar to those concerned in a bill of exchange. Before a promissory note is indorsed, the grantor of it is, with respect to the person who receives it, to be considered as occu- pying the place both of the drawer and drawee of a bill. When the note is iavdorsed, the indorser cor- responds to the drawer ; the grantor to the drawee or accepter ; and the indorsee to the payee, or party to whom the bill is made payable. In France and Eng- land, <5 promissory notes were put upon the same footing <5 In France, the law of promifTory notes ([billets de change) is regulated by the ordonnanceof 1673, &c. In England, promifTory notes were put on the fame footing with inland bills by 3d, 4th Anne ; made perpetual bv 7th Anne, c 25. ^" 3. c 50 OF PROMISSORY NOTES. footing with bills of exchange, long before a similar privilege was extended to them in Scotland, It has been well observed by an English writer, ^ that as commerce advanced in its progress, the multiplicity of its concerns required, in many instances, a less^ complicated mode of payment, and of obtaining cre- dit, than through the medium of bills of exchange, to which there are in general three parties. A trader, whose situation and circumstances rendered credit fron^ a merchant or manufacturer who supplied him with goods absolutely necessary, might have so limited a connexion with the commercial world at large, thai he could not easily furnish his creditor with a bill of exchange on another man, while his own responsibility might be such, that his simple, promise of paymeDt, reduced to writing for the purpose of evidence, might •be accepted with equal confidence with a bill on an- other trader. Hence the introduction of promissory notes ; and hence, as before observed, the expedient devised by the Scotch merchants, of drawing their inland bills, so as to be the same in effect with pro- missory notes, while their form secured to them, at the same time, all the privileges of bills. By these inland bills, almost all the purchases and mercantile dealings in Scotland have for a long period been trans- acted ; and though promissory notes were, in the 12th ' Kyd, p. 1 8. ■01- PROMISSORY NOTES. 51 12th year of the reign of his present Majesty, indued by statute ^ with the same privileges as bills ©f cx- chantre, they still continue to be In general use. As bills, therefore, and promissory notes, may now he considered as virtuallj the sazr.e with respect to their privileges, tlie rules and decisions relative to tlie one may be held as applicable to the other, which will render it unnecessary to treat of them separately. In the subsequent pages, of course, they will be clas- sed together ; and, unless in some particular cases it is found requisite to draw a line of distinction between ihem, It may be laid down, in general, that the law, when stated to have been settled with respect to the accepter of a bill, is to be considered as applying to tlie grantor of a note -, wlien with respect to the ' 1685, Fountainhall, v. i.p.332. Harcarfc, (Bills, Ice.) No. 163. p. 36. ' 1742, Hill a. Scott. Home, No. n6. p. 328. * 1744> Brodie, &c. a. Gordon. D. Falconer, v. I. p. 26. TO BILLS AND NOTES. 65 If there be several drawers who subscribe the bill, all are liable in case of a protest. ' If a factor of an incorporate company draws a bill on such company, and one member accepts it, the acceptance will not bind the company, because it is not a public act of the company, but a private act of the party. •* And on the same principle, if several -persons, each in his individual capacity, employ one factor, and he drav.'S a bill on all of them, and one accepts it, the acceptance will not bind the rest. ^ An authority given to one partner to receive debts owing to, and pay those due by, a copartnery concern on its dissolution, does not entitle him to draw a bill on one of the debtors of the partnership, and, on its being accepted, to indorse it in name of the company. ^ The principal and immediate parties to a bill, are the drawer, accepter, and payee ; but a person may -indirectly become a party to it ; as, where he accepts ■for the honour of the drawer, or any of the indorsers j which is called an acceptance siqyra protest. '' D CHAP. ^ Molloy, b. 2. c. ic. § 1 6. " Ibid. § 19. ^ Mar. p. 64. Bcavves, ph 228. Chitty, 29. ^ Chitty, p. 30. Kyd, 33. See alfo 1788, Dvh jliflh, Sec. a. Sorley, Bell's Cafe;, p. 4R7. ' Poth. n. 2^, 7C,. OF THE REQUISITES OF BILLS. 67 CHAP. III. OF THE REQUISITES QF BILLS, IBiLLS having been originally introduced to save the trouble and risk attending the carriage and transmis- sion of money, and sanctioned by \zw on account of their convenience in trade, obviously require, that mo- ney alone should be their object, and that they should not contain any extrinsic quality incompatible with their primary use and destination. Were it otherwise, they would soon come to interfere with, and usurp, the place of deeds, which demand more formal solem- nities to give them validity and effect. The payment of money alone, therefore, is the proper and genuine province of bills of exchange ; and they are to be con- sidered as bags of money, payable from hand^to hand, as a necessary medium of trade. It has, accordingly, been early ascertained, that hiils must be for the payment of cash only, and not D2 for "68 or THE RErtUlSITES OF BILLS. for t!:e performance of acts. Thus, bills, or precept? for the d'elivery of salt, meal, barley, and other fungi- bles,' were foynd not to possess the privileges of bills of exchange •, ' nor is it even certain, whether such bills will be sustained as probative writs. ^ It was however determined, that an obligation to deliver 4 fish debenture, in payment of a quantity of salt, was ihdorsabie as a bill ; being a transaction betwixt mer- chants, in re mercaioriay and agreeably to practice j "* and the indorsee of a debenture, was preferred to a creditor of the indorscr, who had, posterior to the indorsation, attached in the hands of the commis- sioners of the customs. ^ On the same principle, that bills ouglit to be for the payment of money only, it is necessary that the obligation they bear to pay, should not be clogged witii . . _j ' Whatever confiits in quantity, and is eftimated 1% weight, qiimber and meafure, as grain, wine. Sec. is a fungi- ble, — articles qux funRiohsm r^cipiuiit. In this fcnfc, coin, o»: nionfy, is no doubt a fungible ; but the t^im i . to be here taken as denoting other fungibles, fuch as tliofe men- tioned. " 1713, Ledie a. Robcrtfon, Dicl. v. i, p. 95. — 1715^ Douglas ti. Erlkinc, Dalrymplc, No. 139. p. 193. ^ 1729, Bruce a. Wavk, Di(3^ v. i. p. 95. Scfiloo f apers in Advocates' Library. " 1724, Hamilton a. Dalrj'mple, Edgar, Dec. p. 18. 5 1744, Hope J. Ncilfon, Di6l. v. 3. p. 74. OF THE REQUISITES OF BILLS. 6t^ tvtth uncertain conditions antl contingent events, which fall more particularly within the range of another class of contracts, difFering from bills both in their origin and nature, and their form and constitution. The great advantage of bills, flows from their Aipid circulation, and facility of negotiation; but their circulation and ne- gotiability would soon be stopped, if they were issued into the world incumbered with contingencies and extraneous clauses ; and the utmost perplexity would be introduced into commercial transactions. The payment of a bill ought to be certain ; for,. were it not payable at all events, it would want one of the most essential qualities of a bill, whatever might be its effect as a voucher of debt. But if the event, on the occurrence of which it is to be paid, is not very distant, or such as will in all probability soon happen, so far a conditional bill wfll be sustained 5 nor will it be affected by the payment being directed to be made out of a particular fund. Thus, a bill drawn by a major-general, upon the paymaster of y. regiment, * ordering him to pay 331. out of his clear- ings of the months of July, August, September, Oc- tober, November, and December, in full of his and hautboics' dues from the said regiment, when receiv- ed ; ' and by the drawet * accepted v^'hen clearance comes to hand j ' was found effectual, znd preferable to a posterior arrestment of the same fund, by a creditor D 3 of TO OF THE REQUISITES OF BILL?. of the drawer.*^ But an obligation to pay 10s. pet diem to a person, until he should be provided with a company in the army, conceived in the form of a bill, was found null.' And it may be safely laid down in general, that bills made payable upon a con- tingency, or the happening of some distant event, are liable to challenge j both as being totally inconsistent with the proper nature of such documents, and be- cause bills are now limited to a period of six years, with respect to the duration of their privileges ; and if the time of payment was remote or contingent, the law of prescription could not be made applicable to them. Action was, accordingly, refused, on a bill made payable after the decease of the grantor, who lived thirty-seven years thereafter. « It will not vitiate a bill, that it stipulate what would equally follow though it were not expressed ; and therefore, a bill drawn for a balance at settling ac- counts, and expressing that it, when paid, with the drawer's receipt, should be a sufficient discharge of all claims <> 1710, MacGibbon a. the Managers of the Woollen Manufactory at Newmills ; Forbes, p. 422. ' 1721, Vifcount Ganiock a. Duke of Queenfteiry, Dlft. V. I. p. 95. See Campbell a. Campbell, Bell's Cafea, p. 1 1 1 . 8 1782, Stewait a, FuUarton, &c. Fac. Coll. No. 25 p. 45. «JF THE RE^fUISlTES OF BILLS; 71 daims on the drawee, was supported ; ' nor will the bill be vitiated, by specifying the consideration for which it is drawn *, a?, * for my growing crops of corn and grass, in the town of Musselburgh, which are in- stantly sold to you at the aforesaid price. ' * But a bill containing a clause of substitution, as, * Pay to me or order, or, failing me by decease, to my second Son, Alexander Waddell, the sum of, ' &c. was decid- ed to be null, though a proof was allowed that the accepter had received value at the time he granted the bill. * Two parties having made reference of a law- suit, they accepted bills to each other, which they de- posited with the arbiter, to be given to the party who should be found in the right. These bills were found good, notwithstanding their conditional nature, inas- much as they were to be considered as money, and, in this respect, not deviating from the proper nature of bills. ^ A bill too, addressed to one person as princi- pal, and to another as cautioner, conjunctly and seve- rally, and accepted by the latter, with the words * as cautioner ' subjoined to his acceptance, was held t<3 D 4 be 9 1738^ Trotters. Sheil, Did. v. i. p, 95. ^ 1722, Wilfon ^7. Smith, Ibid. * 1739, Inglis ^. Wifeman's leprefentatives, C. Home, N04 130. p. 218. 5 1751, Clerks?, Kerr, Did. v. 3. p. 74. 7f? OF THE REQUISITES OF BILLS. be valid, though it was objected, tliat a cautionary ob^ ligation could not be constituted by a bill. ^ Any precise set of words is no more essential to tlie constitution of a promissory note, than to that of a bill. It is sufficient if the note, in point of fact, amounts to a promise of payment ; and, in other respects, the same rules will apply to them as to bills, ^riz. that they must be made payable at all events ; and that they must be for tlie payment of money only, and not for the performance of acts, or delivery of fungibles. The mere acknowledgement of a debt, without some words from whence an engagement to pay can be inferred, cannot be construed into a promissory note, such aa the common memorandum, J. O. U. ^ Promissory notes granted by bankers for money deposited, generally contain an obligation to pay inte- rest at the understood rate of per ccntagc. But it was long doubted, M'hether a clause of this nature would not vitiate a bill. And though tlicre is little doubt that, in the present day, a bill stipulating the payment of interest would be supported ; yet it is certainly more advisable to draw bills in the usual manner, for a" principal sum merely, which bears interest by law after the day of payment j and any interest which may be " 1753, Gibfon a. Campbell, Fac Coll. No. 93. p. 141. s Chitty, p. 173. CfF THE REQUISITES OF BILLS. ?S be tliie from the date, can easily be included in the principal. The decisions concerning bills with clauses stipulating the payment of interest, are extremely va- rious and discordant ;. and it is somewhat curious to trace their history. In the case of Henderson a. Sinclair, which oc- curred in 1727, it was found, that a bill bearing interest from the date was good. ^ The same was found in the case, Dinwoodie a. Johnston, ten years afteVwards ; ' and a similar decision was gi- ven in Gilhagie a. Orr. ^ Thereafter, the Court seems to have inclined to the opinion^ that a clause of interest in bills was extrinsic, and inconsistent with their nature ; and therefore, in the next question that appeared before them, the Lords sustained the objec- tion to a bill, that it stipulated payment of annualrent seventeen days before the date: 174<1, MacNeil a. Campbell, Diet. v. 3. p. 75. And, in the same year, a bill bearing annuahrent from the date, v/as decided to be null, notwithstanding the many former decisions in favour of such bills •, and a resolution v/as taken by the Court, to find all such bills void thereafter. ^ In the ♦ Dift. V. I. p. 96. ' 1737* J^t^' 8 1738, Ibid. " r74r, Paterfon a. Finlays, Kilkerr. No, 5. p. 71^ voce Bill of Exchaiipre. Tl' OF THE REQUISITES OF BILLS; the very next case, however, which occurred for th^ determination of the Court, a bill conceived in the £01-* lowing terms, * Nov. 11th 1741. Against Martin- * mas next, pay to me or my order, the sum of 250 * merks, with the first year's interest, twelve merks * and a half, value in your hands •, ' addressed to and accepted by ' John Schaw in Glentore, ' was sustain- ed.' The Court, however, was much divided on the point 3 and it was carried by the narrowest majority. It was argued, that the amount of the year's interest was specified in the body of the bill, and that this was nearly the same thing with what merchants were ac- customed to do every day, who, when they take their bills payable in six months, add the six months inte- rest to the principal, and make the bill payable for the whole, which bears interest after the day of payment ; whereas, here, the principal sum only would bear in- terest after the term of payment. In conformity with the above judgment, the Lords decided the two next cases, Lauder & Husband a. Murray, 1744-, * and Gordon a. the King's Advocate, 1756. ^ There immediately follows, however, a track of decisions of an opposite nature ; and, in Lockhart a. Mirrie, 1750, ^ 1745, Schaw fl. Ruflel, Kilker. No. 7. p- 71. * Home, No. 264. p. 423. •^ Di£l. V. 3. p. 75. OF THE REQUISITES OF BILL?. V^ 1750/ Moncrief a. Moncrief, 1751/ and Douglas & Lindsay a. Brown, 1757/ it was unequivocally found, that bills containing a clause of interest were null. In the last decisions that appear, it would seem that the Court has reverted to what was first laid down as the law on the subject ; and a bill "^ bearing annualrent, where the debt was acknow- ledged by the accepter, and one s containing a stipula tion -♦ Falconer, v. 2. No. 170. p. 203. s Hid, No. 228. p. 277. « Kames, Sel. Dec. No. 136. p. 192. — In reporting this cafe, Lord Kames nvakes the following remark. • It was urged, that this bill was taken in 1725, when, by the decifions of the Court, it was publifhed to the nation, that bills with intereft from their date were legal fecurities ; and therefore, to cut down this bill, is fhowing a fovereign con- tempt for the decifions of the Court of Seflion, as not la the leaft degree to be truftod to or regarded. I propofed, therefore, that the bill fi^ould be fullained upon this parti- cular medium, of being granted by the authority of the Court, and that an aft of Sederunt {hould be made againft fuch bills in time coming. The interlocutor, notwith land- ing, was adhered to ; — a lading reproach upon the judges who voted for it, as being infenfible or bhnd to the grofTell aft of injuftice, viz. the forfeiting a man for doing what was declared at the time lawful by the fovereign court ot the kingdom. ' "> 1760, MacLauchlan a. MacLauchlan, Fac. Colk No. 206. p. 369. 8 1790, Sword a. BLiir, Il'iJ. No. 14 1, p. 280. — It is obferveil, ^6 OF THE REQUISITES OF BILLS.' tlon for interest from the date, such as is inserted iri bankers' promissory notes, were both sustained. But whatever difference of opinion may have been entertained with regard to bills with clauses of inte- rest, those containing a penalty have been pretty uni- formly rejected. ' A bill is effectual, though bearing * with penalty conform to law -,' because, .by law, there is no penalty due, and the words are therefore super- fluous. ^ The sum for which a bill is drawn, is generally placed at the top in figures, and afterwards written at length in the body of the bill, the better to prevent alteration. * It is not absolutely necessary that the sum be first expressed in figures, though always ad- visable J and when tlie sum in figures is different from that in the body of the bill, the latter is to be taken, obferved, in reporting this cafe, that there is authority for ftating, that what chiefly weighed with the majority of their Lordfhips, was the general underftanding and praftice of merchants regarding flipulations of interefl in bills, as in bankers' notes and Eafl India bills, which indicated that fuch of the later decifions as had fet afide bills bearing a claufe of interefl: were erroneous, and ought not to be foh lowed as precedents. See App. p. 50. ^ 1727, Innes /7. Flockhart. — 1 743, Drummond a, Grahame, Kames, R. D. v. 2. No. 46. p. 74. ' 1 741, Did. V, 3. p. 75. ; and 1760, Fac. Coll. No. 2c6. p. 280. * Poth. n. 35. 99. or THE REQUISITES OF BILLS. *77 (taken, piima faciei to be the sum payable -, as, inde- pendent of u man's being more apt to commit a mis- take in figures than in words, the words are the essen- tial part of the bill. ^ Care should be taken, that no blanks be left, either at the top, where the figures are placed, or where the sum is written in the body of the bill, lest the original sum be augmented ; and the safest method is to write over the stamp. For, M'hen a bill already accepted and indorsed, is fraudulently altered from a smaller to a larger sum, in consequence of blanks being left in it, and is afterwards discount-? ed, all the persons whose names are upon it are liable for the full sum which the discounter bona fide paid. * And in tlie case of Grahame a. Gillespie & Co., 1795, June 25th, where blanks had been left in a bill at the time of accepting, by means of whicli the drawer was afterwards enabled to increase the suih from 581. 10s., to 4581. 10s., without giving the bill a suspicious appearance, it was found, that the accep- ter was liable for the increased value to the indorsee who had discounted the bill. * It should also be at- tended t-o, that tlie bill be written on a proper stamp ; for, if the stamp be inferior in value to what is re- quired 3 Beawes, n. 193. Mar. 138 & 139. * 1793? Pagan & Hunter a. Wylie, Fac. Coll. Nc. 62. ^ Fac. Coll Noo 152. p. 345, 78 OF THE REQUISITES OF BILLS. quired by the act, the instrument will be annulled 5 though it would appear, that if it be written on a stamp exceeding the appropriate stamp in value, it will be sustained. ^ As the time when a bill becomes due can only be ascertained from the date, It is neces- sary, in all cases, that bills be dated. In England, a date, it is said, ^ is not in general essential to the vali- dity of a bill -, and when there is no date, the time, if necessary to be inquired into, is computed from the day it is issued. In France, the want of a date, or an error in the date, or the omission of the place where the bill has been drawn, cannot be objected by the drawer who has written, or the drawee who has ac- cepted, the bill. ^ In Scotland, the date is an indis- pensable 6 1804, June 21. B-wnrk, Fac. Coll. No. 168. p. 381. In this cafe, the bill, in head of being written on a ftamp denoting a duty of 2s., was written on one de- noting a duty cf 3s. The Court confidered the enact- ment of the ftamp laws to be folely for the purpofe of raif- ing a revenue, and that there was no view of introducing new folemnities ir> the execution of writings ; and therefore, provided the revenue be not injured, a ftamp may be ufed of any value the grantor choofes. In an Englifh cafe quoted, where a bill h^d I een declared void as being written on a vn-ong ftanjp though of fuperior value, it was obferved, that the ftamp ufed \\as a receipt Jlamp, tlie duties on which might be differently appropriated. See Termly Report?, aadJune 1782, Taylor. ' Chitty, p. 41, 139. 9 Pothier, n. 36. S OF THE REQUISITES OF BILLS. 79 pensable requisite ; and bills without a date are null, if they have not all the solemnities required to other ob- ligations. ' The date ought in no case to be erazed or altered ; and action was refused on a bill where the date appeared epe facie to have been altered, though it did not appear by whom, or for what purpose, the al- teration had been made. ' But where an alteration appeared to have been made at the time of writing the bill, to correct a blunder, such as writing J 780 for 1800, the document was held as actionable. * If a time of payment be not specified, the bill is to be held as a simple mandate to him to whom it is ad- dressed, to pay a certain sum to the holder, who may be entitled to an ordinary action against the drawee, but not to diligence upon it as a bill. ^ By the usual style and tenor of a bill, it is made payable to such a one, * or order ; ' but these words are not essential to its constitution ; and bills are inr dorsable and negotiable, whether they bear * to order, » or not. * The person, however, to whom payment is to be made, should always be named. If the drawer has 9 Erik. b. 3- t. 2. $ 26. Fac. Coll. v. 2. No. 57. » 1796, Murchie a. Macfarlane, Fac. Coll. No. 228. * 1802, Henderfon a. Hay, Ibid. J^o. 23. p. 46. 3 Poth. ch. 2. § 2. n. 32. * 17? 6, Crichton a, Gibfon, Dift. v. i. p. gS, so OF THE REQtriSITES 01- BILLS. lias omitted to mention any person to whom the biU is to be paid, but has doclarcd of whom he has re- ceived value, the equitable construction is, that pay- ment is to be made to that person. ^ Bills payable to the bearer, are good in England, and are transferable by delivery. ^ Bills of this description were prohibit- ed in France, on account of the fraudulent practices which they were supposed to engender ; but, by a subsequent law, they were reestablished. ' It was also usual in tliat country, to m.ake bills payable to ^ person whose name was left blank, in order that the holder might ftll it up when he chose, either with the name of that person, or of any other. As tliese bills, « however, were employed for the pun:'0se3 of fraud and usury, they were afterwards abolished. ^ In Scotland, it was very customary, about a century and a half ago, for persons to execute bonds without filling up the name of the creditor, which got the name of blank bonds, and passed from hand to hand like notes payable to the bearer. These bonds were considered ^ Poth. 11. 31. ^ Bayley, p. 12. — Chitty, 47. ' Poth. n. 2?4. s Sav. Parf. Neg. t. i. 11 v. 3. c. 7. Ces billets ont cte trouve d'une ft dangereiife confequence par les inconvc- niens qui en font arrive, particuliererjieiit dans les banque- routes qu'ils ont ete defendu par plulieurs arrets de fortCj que I'ou en voit tics peu a prefent. a OF THE REQUISITES OF BILLS. »i tTonsidered to be of the same pernicious effect as blank bills in France, aS aflbrding great room for fraudulent devices ; because they excluded the debtor from plead- ing compensation or set-off against the bearer, upon debts due to him by the person to whom the bond had been originally delivered ; and because, though the possessor of a blank bond was known, yet, as it was always in his power to transfer it to another, merely by delivery, his creditors could not by any diligence Secure the sum it contained for their payment; All deeds therefore, in which the creditor's name is left blank, are declared null by 25. Pari. 1696. '■" From this statute, however, indorsations of bills and the notes of trading companies^ are excepted. Upon the principle of this act, it has been decided, that bills payable to the bearer are null a^s blank writs.' The subscription of the drawer, too, was long E held t ^ *" It is enafted, * That for hereafter, no bonds, allignaticns, difpofitions, or other deeds, be fubfcribed blank in the per- fon or pcrfons' names in vvhofe favour they are conceived ; and that the forefaid perfon or perfons be either infert be- fore or at the fubfcribing, or at leaft in prefence of the lame witneffes who are witnefles to the fubfcribing before the delivery ; certifying, that all writs othei-wife iubfcribed and delivered blank, as faid is, fhall be declared null. ' ' 1730, Walkinfhaw's Executors a. Campbell, Did. V. I. p. 104. — Banker's notes payable to the bearer, are, as above mentioned, excepted from the aifl, and pafs from' hand to hand bv mere delivery. S2 OF THE REQUISITES OF BILLS. held to be a necessary requisite ; and there are a mul- titude of decisions, finding, that bills wanting the drawer's subscription, were writs blank in the credi- tor's name, and therefore null by the act ; which, though it excepted indorsations of bills, did not except bills themselves. * Of late, however, another doctf ine has been sanctioned by the Court. In 1785, a bill drawn in these terms, * Against Martinmas next, pay * to Ann Drummond, or order, the sum of 1035 * merks, for value, ' was sustained, though wanting the subscription of the drawer, whose name was men- tioned in the body of the bill. ^ An objection to an accepted bill, that it was not signed by the drawer, was likewise repelled in the case of Hare a. Geddes, &c. j ■• the Court considering the objection to be ob- viated, by the circumstance of the creditor's name be- ing both mentioned in gremio of the bill, and indorsed on it. In Fair a. Cranstoun, 1801, it was determin- ed, that the representative of a person deceased, was entitled to insert his own name as drawer of a bill found, * 17 II, Brand a. Anderfon, &c. Fountainhall, v. 2. p. 636. — 1734, Neilfon a. Ruflel. — 1938, MacRaith a. Murdoch, Dift. v. i. p. 96. — 1748, Douglas, &c. a. Lo- gan, Falconer, v. 2. p. 5. — ' 749» Bonnar a. Grant, Hid, p. ^G. — 1777, Robcrtfon, &c. a. Biflets. 3 Drummond a. Creditors of Drummond, Di£t. V. J. p. 76. " i78r), I bid. OF THE RECttlisiTES OF BItLS. S3 found, blank in the drawer's name, in the repositories of the deceased. ^ And, in 180 1, a bill drawn in these tenivs,— * L.4'25. Dundee, 28. January^ 1802. Three « months after date, pay to me or my order, four * hundred and twenty-five pounds Sterhng, at the * Town-clerk's Office here, being for value delivered < you, ' — addressed to W. H. Moss, and accepted by him, was found actionable, though wanting the draw- er's name, he having become bankrupt and left the country without subscribing the bill. '^ The safest method, however, is, for the drawer iil all cases immediately to subscribe the bill that he draws, which will preclude the possibility of future challenj^e. In foreign bills, the drawer's subscription is utterly indispensable ; for, without it, no recourse could lye agaiiist him ; and, in fact, v/ithout the namei of the drawer, it would be no bill at all. Long prior to the decision in Ogilvie a. Moss, it had been established, that the drawer of a bill is en- titled to si^n it at any time before producing it in judg- E 2 mentj ^ Seffion papers, Advocates* Library. Quarto Ditfl, p. 1678. <^ Ogilvie a. Mofs, Fac. ColL No, 169. p. 382. — Though biUs without tlie drawer's fubfcription are good as documents of debt, tliey are not entitled to the privilege or fnmmary diligence — 1750, A. a. B. Kilker. f B. of Exch;) No. 34. p, S8; 84 or Yhe re(^isit£s of bills. mentj ' even after the death of both the accepter anV3S given by the grantor and his fureties, in lieu of the bill, and foE the like amount. A qucfiion arofc on the valitlity of the bond. The legality of difcounting bills in the way of trade, was admitted by Lord Alvanley : and his Lordfliip obferved, that if nolliing more had been done in that cafe, than what always had been done by way of .accom- modation among mexchants, the tranfafdon w/as not ufurioBs,; . but that the rule mufl be confined ftriftly to that fort of tranfa<£\ion ; for that, if difcount ftiould betaken upon an advance of money, without the negotiation of a bill of exchange, it would amount to ufury. The cafe v;as eonfidered by his Lordfhip to be a forbearance' of 425 ol. for three years, for which the party was to receive intereft for 5000I. He alfo obferved, that the Jury were imprcfled with a notion, that a bill at three years was fuch as no reputable man would dlfc^unt ; though it was faid that fome Eall Ii.dla bills of two years date had been difcounted. That Lord Chief-Juftice Eyre feemed to have thought that the length of the date of the bill was fufticient to afford a prefumption that the difcount was intended as a cover for a loan; and that, if we eonfidered the effeft of difcounting bills at very long dates, the ftrength of that prefumption would be manifeft; for that, jf the prafticc Ihculd be carried to a great Icncth, the intercfi: would annihilate 92 OF THE REQUISITES OF BILf, A bill for 81., whereof part was money w'on at drafts, was declared null upon the 9. Anne ; action being reserved to the holder against the debtor for payment of any furnishings or advances made to him separate from the game debt. * A bill of exchange was given at Paris by Sir John Bland to Robinson, for 6721., of which sum 3001. was money ienfy at the time and place of play, to Sir John ; and 3721. lost, at tlic same time and place, by him to Robinson. In an action brought for payment ©f tlie bill, at the instance of the latter, against the administratrix annihilate the principal. His Lordftip therefore thought, that the difcount of fuch a bill as that, not coupled with the tranfaftion re- fpefting the annuity, would have been almofl fufficient to have afforded a prefumption of ufury; but coupled, as it was, with the redemption of that annuity, it was impoffible to wink fo hard as not to fee what the real tranfaf^ion was. His Lordfhip, accordingly, held the bond to be void. — Ord, 68. Where a bond was given, in lieu of bills, to a perfon not privy to the ufury of prior parties, it was accounted valid. P, on difcounting fcveral promifTory notes, took ufurious intereft. He afterwards obtained credit for them of the plaintiffs (his bankers), who had no knowledge of the ufuriou« tranfacing /laclam iliicitum, and the Lords reduced it accordinglf. WJ. p. 33. Nifbci's Creditors <7. Robertftjr. Bell's Dec. p. 349. I OF THE REQUISITES OF BILLS- 95 Lords suspended the letters sinipliciter, thereby find- ing, that no action could be maintained on the bills. ' In this case, a rule was adopted by the Court, tliat if goods were sold to a smuggler by a merchant settled abroad, whether a native of tliis country or not, and delivered on the spot, he can maintain action for them, though he suspected, or even knew they were meant to be smuggled into Britain. But if he was accessory to the smuggling, and thereby to an infringement of the laws of the land, (which he is bound to know as far as concerns his trade), he cannot demand the aid of the British courts for recovery of his debt. A similar decision was given in Reid & Parkinson a. MacDonald, &c. where bills granted for smuggled goods were found not actionable in the hands of per- sons to whom they had been indorsed without value 5 it being shown, that the indorser of the bills was an agent of the persons by whom the goods had been furnished, who were privy to, and concerned in, the transaction. ^ It was found, tliat no action could lye upon a bill accepted for payment of an apprentice-fee, where the indenture, which was the cause of granting the bill, was void by tlie eighth of Oueen Anne. * It is no ground^ 7 1793, CuUen's Attorney a. Philp ; Fac. CoU.- No. 49. p. 102. 8 1793, Ib'ul. No. 50. p. 103. 5 1754, Donaldfon a. Fulton, Fac. Coll. Wc)^. p. 14^- D6 01? THE REQUISITES CF BILLS.' ground, however, of reducing billd granted for arf apprentice-fee, that the sum was not inserted hi the indenture, nor the principal indenture stamped, — if the master have subjoined the sum to an extract of tha indenture, and got the extract stamped on payment of the duty, though done after the deatli of the ap- prentice. ^ In law, a bill granted for value is called an onerous bill : where no value has been received, it is called gratuitous. Bills having been introduced for facilitating com- merce, and not to convey gratuities, a legacy, or do^ natio mortis causa, cannot be effectually constituted by bill ; ^ nor is a bill granted on deathbed a legal me- thod of constituting a debt or legacy, even to affect moveables, in so far as the bill is gratuitous. ^ But the legacy may be effected, by the donor's granting a bill to a person in his confidence, who, at the same time grants equivalent bills to the intended donees, — the bill, in this case, granted to the interposed person^ not being a donation, but given for a specific value, viz. ' Shepperd a. Innes, Jhid. N° 267. p. 498. * 1712, Tulton & Clark a. Blair, Dift. v. i. p. 95— 1736, Weir a. Parkhill, /^/V/.— 1761, Wright a. Wrights. Fac. Coll. N° 20. p. 37.— 1786, Dovvie a. Millie, Ibid.. N° 254. p. 309. J 1724, Huttons^. Hutton, Dift. v. 1. p. 95- OF THE R-EC^UISITES OF BILLS. 97 vk. the equivalent bills accepted by him in favour of the donees, in the same manner as if the money it- self had been paid to the latter. " The objection to a bill, that it was granted on deathbed, without value, in order to constitute a le- gacy, and that it was not subscribed by the drawer till after the accepter's death, was not sustained as relevant against an onerous assignee. The bill, in this case, was delivered to a third party, before the accepter's death, for the drawer's behoof j and no deed, after delivery, is presumed to be a donatio mortis causa. * A husband, on deathbed, gave his wife, in pre- sence of witnesses, two bills, blank indorsed, desiring her to keep them for her own use. On the husband's decease, his executors having brought an action for delivery of these bills, it was found, that this was a donation betwixt man and wife, unrevoked, and that, tlierefore, the bills belonged to the relict. " And in F the * 178a, Adam a. Johnfton, Fac. Coll. No. 74. p. II3 lo this cafe, it was obferved on the Bench, that prior to the a£l limiting to fix years the commencement of an aftion on bills of exchange, as they might have been brought into fuit ^t anv time within the period of the long prefcrlption (forty years), there was evidently a much greater danger of frauds being committed by means of them, than there has been fincc that enaftment. Hence, thefe documents are to be con- ftrued with kfs fufpicion and ftridnefs than formerly. 5 1761, Shaw a. Farquhar, Fac. Coll. N° 65. p. 149- ^ 1753, Barbour & Blackv.ood a. Hair, Ibid. N® 62. p. 95. 9^ OF THE REQUISITES OF BILLST. the case, Provan a. Calder, a gratuitous bill of 100/.> granted on a promise of marriage, was sustained, al- though marriage did not follow. ' A bill, given as a reward of services, is good. Steel, in February 1790, granted to Wemyss, * as a consideration for his services and trouble, ' a promis- sory note for 5001., payable at the following Whit- sunday. In payment of which, he, on the 7th June, gave him the following check or draft on the Bank of Scotland. * On sight, pay to David Wemyss, or his * order, five hundred pounds Sterling ; which place to * my account without further advice. ' In an action of reduction brought by Steel's disponees, the Court sustained the promissory note and relative draft. ^ Bills are often drawn for value in accoimt^ which is the ordinary style of drawing foreign bills by mer- chants who are in habits of commercial dealings with different countries, and have numerous transac- tions and current accounts with the persons drawn upon. A bill drawn and accepted in this way, does not always imply that the accepter had actually value In his hands at the time. On the contrary, it is a very frequent mode of drawing for the sole accom- modation ' 1742, Karnes, Rem. Dec. v. 2. N° 30. p. 46. 8 i793» Difpoiiecs of Steel a. Wemyfs, Fac. Coll. N' 62. p. 9j. OF THE REQUISITES OF BILLS. 99 modation and behoof of the drawer. Neither docs the remittance of a bill of this description to the cor- respondent, though made payable to him, traisfer the property of the bill, unless he can show that he is creditor of the remitter on a balance of accounts. ' Bills should always be addressed to the person drawn upon, and his name and designation correctly expressed •, but the want of a special address or direc- tion is supplied by acceptance ; for the address serves merely to mark out him to whom a bill is to be pre- sented for acceptance, and when an accepter appears, even though the address be wanting, he is presumed to be the person the drawer had in his eye. * It is said, that if the drawer of a foreign bill omit to ad- dress it, but has advised his correspondent of his hav- ing drawn upon him for the amount, the bill may be presented to him, and protested if not accepted, so as to make the drawer liable in charges ; and that the person so advised ought to accept, if he has funds of the drawer in his hands. * Bills of exchange sometimes conclude with the words as per advice^ in which case; a letter of advice from the drawer generally accompanies the bill. Such F 2 bills * 1741, Forbes a. Fonnereau, Home, N°i75. p.29i. * 1727, Grierfon a. Sutherland, Kam. Rem. Pec, V. 1. N° 96. & 97. p. 189. * Mar. p. 142. TOO OF THE REQUISITES OF BILLS. bills cannot be safely paid until the letter of advice arrive -, nor can the drawee safely pay, if the bill and letter of advice do not tally ; ^ but he may, in all cas- es', pay without waiting for the letter of advice, supra protest, and will thereby keep the drawer bound. * Bills are also sometimes made payable * without further advice ; ' in which case, the drawer may pay whenever the bill becomes due. * If a bill in the hands of the payee or holder, be altered or vitiated in any material respect, it is ren- dered null, and the parties are freed from the obliga- tion thereby created. Scaccia proposes this question. The holder of a bill of exchange falsifies it, and writes a larger sum than that which the bill bore. The falsification is made in such a manner as to deceive an attentive and intelligent observer. The banker, deceived by the appearance of the bill presented to him, pays the en- tire sum to the holder ; — Ought he to have recourse, upon the drawer for more than the sum for which the bill was originally and actually drawn } Scaccia decides in the affirmative. ^ Pothier thinks that the drawer 3 Malyne, ch. 6. obs. 8. * Scaccia, Traft. de Commerciis et Cambio. j 2. gloff. 5. n. 358. ' Poth. n.36. 169. • Traa.de Com. § a. gl.5. quacfl. ij. — And this far maybe £i;d OF THE REQUISITES OF BILLS. 101 drawer is not liable in repetition (repayment) of the sum, in as much as the falsification of the bill was a fortuitous case, which he could neither foresee nor prevent, and with which, therefore, he could not be said to charge himself. But if the loss arose from any fault of the drawer in making out the bill in such a manner as to afford room for an alteration or addi- tion, he conceives the drawer would be liable, as he ought to have drawn his bill in such a manner as to prevent falsification. From whence, says he, it re- sults, that one ought not to decide indiscriminately, that the drawer is bound to indemnify the banker for the loss into which he was betrayed by the falsification of the bill 5 on the contrary, he Is only liable to such claim of indemnity, when, by any fault on the part of him or his agent, he has given occasion to the fal- sification, by drawing the bill, without taking the proper precautions, which he might have taken, to ex- clude it. But if the falsification might have been dis- covered by a careful examination of tlie bill, the blame attaches to the banker in having paid it, as he F 3 ought faid in fupport of his opinion, tfiat according to the rules of the con- traO of mandate, the mandant is obliged to reimhr.rfc the mandatary for all difburfements to which the mandate has given occaflon ; pro- vided the mandatary has not, by his own fault, difbuifcd more than was neceflary. ' Mandator debet rcfundere mandatario quid- quid ei incnipabiiiter abeft ex caufa mandati. ' Pand Jiiftin. tit. Mand. No. 53. dc Polh, 103 OF THE REQUISITES OF BILLS. ought to have inspected it minutely ; and he is not entitled to demand indemnification for a loss arising from his own fault or negligence. ' Boucher is of opinion, that the banker ought to sustain the loss, for accepting and paying the bill without a letter of advice, which he ought not to have done, and should therefore suffer for his impru- dence. 8 But the perspicacity of Porhier cannot often be arraigned. The case might evidently occur, where 110 letter of advice could be given or required, as ac- tually happened in that of Graham a. Gillespie & Co., 1795, where there was an example of both of the hy- pothetical cases mentioned by Pothier ; and the Court decided in exact conformity with the principles laid down by that sagacious commentator. The accepter was found liable to indemnify the discounter for the whole sum, in a bill which he had accepted with va- cant spaces ; by means of which, the holder had been enabled to alter and augment the original sum ; but he was not found liable to repay the contents of a bill, the falsification of which had given it a crowded and suspicious appearance, and might have been de- tected by an accurate inspection. The bill was con- sidered to be vitiated in toto^ and not to be actionable even for its original amount. ' In ' Part I. ch. 4. Art. 3. n. loi. * Inft. Com. n. i no. ^ Dia. v. 3. p. 76. OF THE REQUISITES OF BILLS. 1G3 In the same manner, when a bill had been altered, in so far as the words * on demand ' had been erazed, and the words * one day after date ' substituted in their place, it was found that no action could lye on the bill so vitiated. The bill, by the alteration, was not the contract of the parties ; and, independent of the bill, there was no pretence for the holder saying he was entitled to recover upon any other footing. By the vitiation, the bill was considered as annihilat- ed, and it could not be restored, or made a ground of demand. * F 4 But ' 1 80 1, December 26. Lee v. Murdoch Robertfon & Co. This cafe was decided upon an appeal to the floufe of Lords. It is not yet coUefted in any of the volumes of Decifions. The following report, taken by a perfon on the fpot, has been communicated to the author. Robert Donald was a partner in a banking-houfe at Glafgow, car- vied on firft under the firm of Spiers Murdoch & Co., and afterwards under that of Murdoch Robertfon & Co. Mr Donald was like wife a partner in the mercantile houfe of Lee Rodger & Co., of which Mr Lee, the appellant's father, (now dead) was alfo a partner. Mr Do- nald, in his individual capacity, had a caflvaccount with the bank of Spiers Murdoch & Co.; and, having overdrawn it, he, with a view to reduce the balance upon it, gave the bank, without the knowledge of Mr Lee, the acceptance of Lte Rodger & Co. for loool., payable in fix months. This bill was not paid when it fell due ; and afterwards a new bill, payable on demand, was taken by the bank, from Lee Rodger & Co. (ftill without the knowledge of Mr Lee) for the princi- pal and interefl, amounting together to 1068I. 19s. yd ; and the for- mer bill was upon this occafion delivered up. The fccond bill was ai- Jowcd to lye over for fevcral years ; but the holders, the rcfpondcnts, at lO* OF THE REQUISITES OF BILLS. But if the bill Is altered before acceptance or in- dorsement, the accepter cannot take any advantage o£ the at length brought an aftion for payment of it againft Mr Lee the ap- pellant. In the courfe of the proceedings, ft appeared that the bill had been altered, in fo far as the words ' on demand ' had been craz- ed, and the words ' one day after date ' fubftituted in their place ; and upon the judicial examination of Mr Robertfon, the cafliier of the bank, it was acknowledged that the alteration had been made immediately before commencing the aftion, in order to found the bank in a claim for intercfl, which they could not have maintained on the bill as it originally flood. The Court of Seffion, after various procedings, upon the 4th of July 1 798, pronounced the following in- terlocutor. * Find the defender liable to the purfucrs for the fum of * loool. contained in the original bill granted by Lee Rodger & Co., ' with intereft thereon ; and remit to the Lord Ordinary to allow the ' purfuers to amend the libel to that cfTcft, and to proceed and deter- ' mine as to his Lord (hip fliall fecm juft. ' But parties preferred re- claiming petitions againft this interlocutor; and upon the llth Feb- ruary 1800, their Lordftiips pronounced this other interlocutor. ' Find, that the meaning of the Court, when they pronounced the ' judgment reclaimed againft, was to fuftain the claim of the purfuers * to fuch an extent, fo that the fame (hould not exceed the fum of ' 1068I. 19s. yd., and the intcreft thereof from the ajd February ' 1786, until payment : Find the defender Robert Lee liable in thcfc ' Aims accordingly ; and, with this explanation, they adhere to their ' former interlocutor : And further. Find the defender liable in the 'full expenfe of cxtraft, but in no other expenfes, and decern.' From thcfe interlocutors Mr Lcc appealed to the Hov.fc of Lor4s ; and after counfcl had been heard atprcat length, the Lord Chaneellor obfcrvcd, that had an aflion been brought in England upon the fc- cond bill, it would have been fufEcienl, laying all the other circum- Aances of the cafe out of confideration, to have dated, that the bill, in confcqucncc of the alteraiion, was not the contra on a refusal on the part of the drawee, protests it for non-acceptance. The drawer is immediately advised of this, and put on his guard, both to adopt other measures for withdrawing liis effects out of the draw- ee's hands before the expiry of the three months, and to provide funds for payment of the bill without trusting to his correspondent. But when the bill is I at OF ACCEPTANCE. Ill at once protested for non-acceptance and non-pay- ment, at a distance of three months after being drawn, and returned abruptly on the drawer, his effects in the drawee's hands might not only be lost in the mean time, but he might be taken by surprise, and be at a loss to answer a demand coming upon him so sud- denly ; especially as, from his not hearing, for so long a period, of the bill, he might have had good reason to conclude that it was accepted and paid. Not to men- tion, that were a bill not presented for acceptance till the day of payment, the drawee, if he had received no advice, might happen to be unprepared for it, and be obliged to suffer it to be dishonoured ; whereas, had it been duly presented for acceptance when it came to the payee's hands, and accepted by the drawee, he would thereby have subjected himself to payment, and in all probability, have provided funds to retire it when due, and thus saved both the honour of the drawer and the costs of protest, commission, reexchange, &c. By acceptance, a new debtor is added to the drawer, and a new security to the bill, which becomes a more negotiable instrument.^ And as the drawer may sustain a loss by the holder's keeping it any great length of time, it ought, in all cases, to be presented as soon as possible. ^ It has, however, •• been ' Beawes, p. 491. — Scarlet, ch, ic. r. 32. * Poth. n. 143. 112 OF ACCEPTANCE. been decided, that a bill payable at a day certain, need not be presented by the porteur for acceptance, before the day of payment ; "> and this, accordingly, is laid down as the law at present,' though it is evidently at variance with what has been stated and admitted to be the law with regard to bills payable after sight, VIZ. that they do not require the same rigorous nego- tiation with bills payable on a certain day. As a ge- neral rule, therefore, it is always adviseable that bills of every description, whether payable after sight or after date, be presented for acceptance within a rea- sonable time. What is to be deemed a reasonable time, must be determined from a consideration of the situation of the parties, the distance at which they re- side, the course of post, and other circumstances. Generally, it may be presumed, that such time only will be allowed, as is sufficient to enable the holder conveniently to go and present the bill for acceptance, or to send it for that purpose. * But if a bill is sent for acceptance, it .ought not to be suffered to lye for any length of time in the drawer's hands, without getting it either accepted or protested for non-accept- ance. Porterfield, ' 1727, Fergufon a. Malcolm, Did. v. 1. p. roi. * Erfk. b. 3. t. 2. ^ 32. ' Stair, b. i. t. ii. ^ 7. — L'Art des Lettres de Change, ch, 6. $ 6.*i- Forbes, 95. . dF ACCEPTANCE. 113 Porterfield, on the 3d May, transmitted to C. & R, Ji'alls, a bill for 1291., dated 2d May, drawn by John-. ston of Glasgow, on Bortbwick in Edinburgh, payable, three days after sight, to Porterfield, and by him in- dorsed to C. & R. Falls, who, on the 7th May acknow- ledged receipt of the bill, which they sent to Edin- burgh for acceptance. Borthwick happened to be out of town when the bill arrived j but his clerk wrote to Messrs Falls, on the 11th May, that he was soon expected home, when the bill would be presented. On the 16th May, Messrs Falls sent a clerk to Edinburgh, to require that the bill should be either returned or accepted. Borthwick requested that it might be left n few days longer, which was done ; but the bill not being returned, Messrs Falls, on the 5th June, again sent a clerk, with instructions either to get the bill accepted or protested. Borthwick delivered the bill to the clerk, with a protest taken against himself on the 31st May, for non-acceptance, and against the drawer and indorser for recourse ; and on the Gth June, the clerk took a new protest against the whole parties, for non-acceptance, recourse, &c. and against Borthwick for damages, on account of his keeping up the bill without accepting it or returning it with a protest for non-acceptance. On the 7th June, intima- tion of the dishonour was made to Porterfield, who re- fused payment, on the ground of the bill not being properly negotiated. And tlie Court found, that from G the Hi OF ACCEPTANCE. the undue delay in getting the bill accepted or pro- tested, recourse was lost. ^ On the same principle, if a bill be left in the hands of the person drawn upon without being accepted, till news come of the drawer's insolvency, the loss will fall on the holder, whose duty it was to have looked after his bill, and got it either accepted or protested in due time i * unless the insolvency occurred after the bill had been redemanded. ^ If a person receives a bill, and instead of sending it by post for acceptance, keeps it till he himself sets out on a journey to the place where the drawee lives, by which means a delay is created, he loses his recourse upon the drawer or in- dorser. ^ It is incumbent on the bearer of a bill, when he acts as agent for the proprietor, in all cases to present it for acceptance as soon as possible, as it is only by acceptance that the person on whom the bill is drawn becomes debtor, and responsible to the holder; and if the affairs of the drawer should get deranged, an agent neglecting to present the bill for acceptance, would be liable in damages to his constituent. ^ If 3 1766, Falls ^. Porterfield ; Fac. Coll. No. 109. P- 374- * Scarlet, ch. 10. R. 17. ^ Dupuis* ch. 10. n. 8. — Scac. § 2. gl. 5. n. 335. ^ 1773, Finlafon a. Ewing, Fac. Coll. No. 53^ p. 136. ' Poth. n. 128. — Mar. 46. — Beawes, 117. OT ACC-EPTANCE. 11$ If a bill left for acceptance be lost or mislaid, either by the person on whom it is drawn, or by any of his servants, so tliat it cannot be returned to him that left it, either accepted or unaccepted, he who lost the bill (if he intended to accept, or had accepted it), should grant a note for payment of the sum in the bill at the expiry of the specified time 5 and, should this be re- fused, a protest ought immediately to be taken for non- acceptance, and forwarded to the drawer ; and if the contents of the lost bill are not paid or satisfied by the time it becomes due, a protest for non-payment should at any rate be made. ^ II. Acceptance is either written or verbal. Iti this country, verbal acceptances are not in use, as sum- mary diligence could neither proceed on such accep- tances, nor could they be proved otherwise than by oath of party. ^ But in England, a verbal, or parole acceptance, is as obligatory on the drawer as a written one. * When the bill is presented for acceptance, the G 2 holder * Beawcs, n. 17. — In proving the tenor of a loll bill, the purfuer of the aftion muft condefcend on a fpecial cafus ami^enis. — 1780, Campbell a. The Creditors of the York Buildings Company, Fac. Coll. No. 106. p. 200. ^ In France, too, the acceptance mud be written. * Celui fur qui eft tirce une lettre de change doit en faire Tacceptation par ecrit. * Ord. de 1673, tit. 5. art. 2. ' Bayley, p. 44. — Chitty, 76. — Kyd, 69. 116 OF ACCEPTANCE. holder is entitled to insist on such acceptance by the drawer, as will subject him, at all events, to payment of the bill according to its tenor ; * and whether ac- cepted or refused, the bill, as the holder's document of debt against the drawer, must immediately be return- ed. If the bill be payable after sight, and the drawee detain it some days without declaring his intention to accept, and afterwards incline to do so, the acceptance must be from the date of the first presentment. ^ The accepter has no liberty of adding any stipulation or quality to his acceptance, without the holder's con- sent ; the acceptance must be simple and absolute, unclogged with any condition. " Nor is it safe for the holder to take a conditional or qualified accept- ance, without authority from the drawer or last in- dorser to that effect, and if he does so, it is at his own risk and peril. ^ He may, however, take an accept- ance for part of the sum, if he protest the bill for the remainder ; it being for the drawer's interest to have his debt diminished. ^ In the same manner, taking acceptance ' Stair, b. I. t. ii. § 7. — Poll), n. 47. 3 Scarlet, ch. 10. R. 18. '» 1712, Naughton a. Ritchie. — 1781, Campbell a. Campbell, Did. v. 3. p. 77. s Savary, torn. i. liy. 3. ch. 6.— .Forbes, p. 98.. — Scarlet, ch. 10. R. 29. << MoUoy^ b. 2. ch. 10. $ 2C. — Boucher, n. 1048, — Forbes, 99. I OF ACCEPTANCE. 117 'acceptance of a bill some days subsequent to tlie time of payment, and after it had been protested for non- acceptance, was found no wrong step of negotiation. ' But though a bill may be accepted after the day of payment, so as effectually to bind the accepter, the drawer and indorsers will be discharged, unless due notice of non-acceptance, or non-payment, be given 5, and upon such acceptance, the accepter is liable to pay the bill on demand. ^ By the French edict of Commerce of 1673, it is declared, that a qualified acceptance may be held as a refusal, so as to entitle the holder to protest the bill. ' In England, if the holder receives a conditional, or qua- lified acceptance, and gives immediate notice to the other parties of the nature of the acceptance, they con- tinue bound, in case the drawee should not pay. ' In Scotland, if the holder suffer the acceptance to be qualified ; if, for instance, he consent to prolong the day of payment, or to take a conditional acceptance, such as, * if provisions come to hand betwixt and the day j ' or, * if goods or hills in hand raise the sum; ' it imports his consent, so as to preclude him from pro- G 3 testing -" 1705, Nov. 14. Brown a. Hume. — Foibes, p, 99. 8 Chitty, 7«-— Bayley, 47. 5- Tit. 5. art. 2. ' Chitty, p. 79. — Molloy, b. 2. di. lo. ^ 20. 118 OF ACCEPTANCE. testing for non-acceptance. * But by this prolongation of tlie time of payment, the drawer cannot be affected if he has not given his consent to it j and therefore, the holder loses his recourse upon him in the event of the accepter's failure before the bill becomes due. ' When the drawer is creditor of him who has given value for and remitted the bill, he may accept it * to ' pay to himself, ' provided the debt is liquid, and either due at the time, or falling due before the bill is payable, so as to be in a state of compensation j * nor is this, according to Pothier, to be considered a condi- tional acceptance, seeing it arises upon a transaction of the holder's own. ^ In the same manner, if a cre- ditor of the holder of the bill, has, before it is pre- sented, arrested the funds in the hands of the drawee, he ought, in that case, to accept in these terms, — * to * pay to whoever shall be found to have best right to ' the contents. ' '^ The drawee ought not to accept bills after he is aware of the drawer's failure, even though he possesses funds ; because, after that event, one creditor of the drav/er ought not to be paid in preference * Stair, b. i. t. ir. $ 7. 3 Poth. n. 49. — Boucher, n. 1048. * Boucher, n. 1387. * N. 47. — Dupuis de la Serra, ch. 8. ^ Boucher, n. 1045.— Poth. n. 47 — Dupuis, ch. lo^ or ACCEPTANCE. lib preference to another. ^ Any person having accepted a bill, either absolutely or conditionally, may score out his acceptance before the bill be out of his hands, but not after having delivered it to the payee. « The usual way of accepting a bill is, by writing thereon the word ' accepted, ' or * accepts, ' and subscribing the drawee's name ; or the name only is subscribed : and if the accepter be afraid of any alter- ation being made in the sum, he ought to write, * ac- * cepted for the sum of so much. ' ^ "When a bill is payable after sight, the day on which it is accepted ought to be specified, because the time of payment is ascertained by the date of the acceptance. Bills pay- able at sight, or on demand, require no acceptance, and need only be presented for payment, and, if refus- ed, protested ; there being no days of grace on such bills. ^ In England, however, a bill payable at siglit lias the usual days of grace ; * for a bill payable at sight is not there considered as a bill payable on de- mand, or included under the exception of the stamp G 4 act ' Scac. § 2. gl. 5. n. 390. — Beawcs, 11. 139, — Poth. n. 96. 8 Sav. torn. I. liv. 2. ch. 5. — Boucher, n. 1041. — Dupuis, ch. 10. n. 6, 7. ' Boucher, n. 1017. * Sav. torn. I. liv. 3. ch. 5. — Scarlet, ch. i6. R S * Baylev, p, 66 120 OF ACCEPTANCE. act of 23. Geo. III. c. 49. § 4. ^ in favour of such bills. A bill on demand is payable instantly. * When a bill is accepted by a partner of a copart- nery, on the company account, he subscribes the com- mon firm of the copartnery, or expresses that it is for self and partners, or for self- and company. Two persons in copartnery having commissioned goods from a factor abroad, and advised him by letter to draw bills for the same, and they would honour them ; which he having done, one of the partners ac- cepted in the ordinary way, and the other accepted for his own part j it was found that the latter was liabk for the whole. ^ If a bill be addressed to several persons jointly, who are not in copartnery, it may be protested for non- acceptance if any one refuse, although the rest accept.* And where the acceptance is by a factor or procurator, it is necessary to specify that he acts jo^r procuration, or in quality of factor, otherwise he will be personally bound. '' If the drawee be not capacitated to accept, and 2 And now 44. Geo. III. g. 98. § 8. " Manning, p. 8 Chitty, 146. ^ Naughton a. Ritchie, Did. v. i. p. 98. * Molloy, b. 2. c. lo. § 18 — Mar. 64.— Beavves, 228. ' Ch. 2, p. 61, OF ACCEPTANCE^ 121 and to bind himself to pay the amount of the bill, it may be treated as dishonoured. A promise to accept, as * leave your bill with me, ^ and I will accept it, ' or * call for it to-morrow, and f it shall be accepted, ' is said to amount to a verbal acceptance. ^ The word ' seen ' written on the bill, is also said to be equivalent to an acceptance. ' And in England, writing the words * accepted, ' * pre- * sented, ' the day of the month, or a direction to a third person to pay tlie bill, will amount to an accept- ance on the part of the drawee. ' Acceptance is also sometimes implied ; as when the drawee keeps up the bill after the same is redemanded. * But according to the English decisions, in order to constitute an accept- ance by implication, there must be some circumstance, from whence it may be inferred that the drawee imar- gined he ha4 induced the holder to consider the bill as accepted ; and therefore, an answer given by the drawee, * there is your bill, it is all right ; ' or the an- swer of a merchant to the drawer, fhat he would * duly honour his bill, ' will not, unless accompanied vith circumstances that may induce a third party to take • Molloy, b. 2. ch. 10. § 20. — Chitty, p. 77. 9 Poth. n. 45. ' Bayley, p. 47. — Chitty, 75. & 76. ' Pupuis, ch. 10. n. 8, 9. — Poth. n. 46, i22 6F ACCEPTANCE. i take the bill by indorsement, be construed into an acceptance. ^ III. The efFect of acceptance is, to give credit to the bill, and to render the accepter liable according to the tenor of his acceptance; and the very act of accept- ing, implies an acknowledgement that he has effects of the drawer in his hands. At least this presumption is good with regard to the holder, who is not obliged to inquire whether the drawee were the drawer's debtor at the time or not. By the acceptance, the drawee constitutes himself debtor to the payee, and to all the indorsers, who are thereby entitled to demand and exact payment from him. * When the bill is once accepted absolutely, it cannot in any case be re- voked; and the accepter is in all events bound, though he were to hear the next moment of the drawer's bankruptcy, and though the failure was before the ac- ceptance. * But if the drawee was not possessed of effects of the drawer at the time of acceptance, and was induced to accept by any mistatement or fraud on the part of the holder, this is a sufficient ground for refusing 3 Kyd, 74.-~Chitty, 78. * Boucher, p. 223. 5 Poth. n. 118. 120 — Beawes, n. 23. — Molloy, b. a. c. 10. § 28. OF ACCEPTANCE, 1^ refusing payment of the bill when due. It is a fraud on the part of the holder, when, being in the know- ledge of the drawer's bankruptcy, he conceals this cir- cumstance from the drawee, in order that the bill may be accepted. And, according to Pothier, if the ac- cepter can prove that the holder, when he presented the bill, was in the knowledge of the approaching fail- ure of the drawer, he is entitled to be restored against the acceptance. If any extraordinaay means have been used in procuring acceptance, such as sending a bill by express to get it accepted, and the drawer's bankruptcy ensuing immediately afterwards, a pre^ sumption of fraud is afforded, sufficient to entitle the accepter to insist on the acceptance being annulled. ' When 7 Poth. n. 1 18. The accepter of a bill urged, in a fufpcnfion, that he had been fraudulently induced to put liis name to it without full value, and infixed for a judicial examination of the holder, in which, if he (hould advance what was not true, the fufpender would have an opportunity of difproving it, and fo to invalidate his claim. It was obferved on the Bench, that where circumftances of fraud are relevantly ftatcd againft the holder of a bill of exchange, and a proof offered, fuch previous examination as was here required might be highly expedient, botU for fuperfeding the necedity of further evidence, and for the better in- veQigation of the truth. But to allow that method of proceeding, in confequence of general allegations like the prefent, would tend, in a great meafure, to obftrudt that free currency of bills of exchange which is fo eflcntial to trade. The Lord Ordinary rcfufed the bill of fufpenfion ; which judgment the Court affirmed, after advifing a re- claiming petition for the fufpender, with anfwcrs. — 1785, fac ColU No. aa;. p. 353. Goodfcllow a. Madder. 124' OF ACCEPTANCE. When a bill payable after date is presented for ac- ceptance, the drawee will not be allowed to deliberate whether he will accept or not till the bill fall due, upon the pretence of his not being at the time in funds for the drawer, but that he expects to be so be- fore the bill is payable, and will then determine either to accept or refuse. If immediate acceptance be not made, the bill must be protested for non-acceptance j* as it is but reasonable that the holder should have it ascertained upon whom he is to rely for his money. It is usual, however, to retain the bill till the period of payment, and to transmit the protest only, with advice to the drawer; and sometimes botli bill and protest are kept till the former falls due. ' A question naturally occurs here, whether a per- son, who is debtor to the drawer, is in all cases bound to accept the bills drawn upon him, to the ex- tent of the debt he owes. Where a banker, or any other person, has received funds of the drawer, for the purpose of enabling the latter to draw upon him, there is evidently a tacit or expressed contract, by which the former is bound to accept and pay the drawer's bills, till the funds in his hands be exhaust- ed. In the same manner, when the drawer writes to inquire ■ Savary, torn. i. hv. 3. ch. 5. ' Forbes, p. 97.— Sav. ibid. OF ACCEPTANCE. 125 Inquire whether or not the person he means to draw upon will accept his bills, and receives an answer that they will be accepted, the drawee, in the case of a subsequent refusal to accept, is liable to the drawer for the loss and costs thereby occasioned. ' But be- sides this, it is the opinion of most mercantile people, that a merchant, who is creditor of another merchant in a liquid sum arising from commercial dealings, has a right, without any express consent of the debtor, to draw a bill of exchange upon him for the amount ; and that, if he dishonour the bill, he is liable in da- mages, costs, reexchange, &c. to the drawer, just as if he had agreed to the draft. Upon the common principles of law, no man can be made a mandatary without his own consent ; and a creditor can only re- cover from his debtor by an ordinary action. It seems unreasonable, therefore, to suppose that the debtor should be subjected to a large expense, arising from a presumed obligation to which he has never given his consent. When I purchase a bale of broad cloth from a merchant of Leeds, or a box of muslins from a manufacturer of Manchester, I am liable for the price, after the expiry of the ordinary or stipulated period of credit j but I am not obliged to accept of bills drawn upon me for the price, without notice, and ' Scarlet, Style of Exch. ch. 7. R. 25.— ch. n. R.37 t3^ OF acc^'pYav:6^. and at random periods of payment. The general po- licy of merchants is to keep as small a portion as pos- sible of their capital unemployed, or in an v.iprofit- able state. Their funds, therefore, have usually a fired and destined application relative to the bills which they know of, and have already upon the cir- cle ; and any unforeseen demand, or unexpected draft of vi^hich they have not been advised, and for which they have made no provision, must conse- quently derarige their plans, and frequently expose such bills to the risk of being protested, and sent back dishonoured. The expenses incurred upon this transaction ought, one would think, to be borne by the creditor who rashly and unadvisedly drew the bill, and not by the debtor, who had received no intima-' tion to prepare him for such an event. Many mer- chants, however, entertain a different idea on the subject i though it certainly appears to be inconsist- ent both with sound principles of law and with rea-~ son, that a bill should be abruptly drawn on a debtor, without his previous knowledge or consent, even in commercial matters. As this is a point of mercantile law, it must no doubt be regulated by the general usage ; but though the practice may be admitted in regard to foreign bills, and in cases strictly commer- cial, there seems to be no adequate cause for allow- ing it in cases that are not commercial. It is laid down, in general, by one of our great institutional writers. OF ACCEPTANCE. 127 writers> tliat if a drawee refuse to accept, while he is possessed of the drawer's effects, he is liable in all the damages which the drawer shall suffer by that re- fusal ; because the drawee was debtor to the drawer previously to the draft ; * which doctrine, it is con- ceived, ought to be received with some modification. It is sufficiently estabhshed, that when a bill is drawn upon a person who is indebted to the drawer, or has effects belonging to him in his hands, he cannot af- terwards pay to the drawer, whether he has accepted die bill or not. ' IV^ If the drawee of a bill declines accepting, but wishes to prevent the return of the bill, and the expenses that this will occasion, he may accept for t]ie honour of the drawer or indorser, which is called an acceptance snjjra protest -, * or, in case of the drawee's refusing to accept in this way, any other person may do so. When a bill is to be accepted supra protest, the accepter must appear before a no- tary, and declare that he accepts such bill in honouir of the drawer or indorsers, and that he will retire it when due ; and must subscribe the bill thus, * accept- ed suj)ra protest, in honour of A. B. ; ' or, more brief- iy > ^ Erflc. b. 3. t. 2. § 29. ^ 1712, Gordon a. Anderfon, Did. v. I. p. 97.— Boucher, n. TC98. * Molloy, § 29. 33. — Poth. n. 25. 128 OF ACCEPTANCE. » ly, * accepted S. P., ' by which acceptance he is efj factually bound to the holder ; * and a notorial instru- ment is made out, narrating the cause and nature of the acceptance. This instrument is essentially neces- sary in all cases of acceptance supra protest ; for otherwise, an accepter might easily, after retiring the bill, make his acceptance a qualified one, by adding the words, * accepted S. P. for the honour of the drawer and indorser, ' if he wished, at any future pe- riod, to claim relief. ^ Before a bill be accepted in this manner, it is requisite that it be protested by the holder against the drawer for non-acceptance •, ' and notification thereof given to the drawer. ^ When the acceptance supra protest is by the drawee himself, he must by the first post advise the person, for whose honour he has accepted, of the quality of the accept-' ance, and send this protest and instrument of accept- ance to him, that he may take the necessary measures against the drawer or prior indorsers, ' When the acceptance is by a third party for the honour of the bilt s Parf. Neg. torn. 2. ch. 9. § 5. — Beawes, n. 107. 108.— Mar- p. 87. — Scarlet, ch. 12. ^ 170^, Carflairs a. Paton, Did. v. i. p. 99. ' Poth. n. 114 — Molloy, $ 28. 8 Scarlet, ch. 7. R. 16. — Forbes, p. 102. 9 Beawes, n. ic8. — Parf. Neg. ch. 9. Max. 3. — Scar- let, ch. 12. R. 4. OF ACCEPTANCE. 129 bill or of the drawer, it is incumbent on him to give 3 similar intimation to the drawer, that he may be enabled to adopt the proper steps against the drawee. The possessor of a bill cannot, it is said, refuse re- ceiving acceptance suj^ra protest from any responsible person, unless he have orders not to admit of such acceptance; in as much as a simple acceptance, and an acceptance supra protest are the saine to him, since they alike bind the accepter to pay, without affecting the porteitr'?, recourse against the drawer and indorsers, if payment be not made when the bill falls due ; and as the accepter is bound to pay all charges. ^ It is doubtful, however, whether the holder is obliged to acquiesce in such acceptance j and, in England, it has been decided that he is not. * The accessory obligations upon the other parties, arising from the acceptance sup-a protest, will be treated of in the sequel. H CHAP. ' Beawes, n. 27. — Scac. §2. gl. 5. n. 390, — Scarlet, ch. 12. R. 6. * Chitty, 104. OF INDORSATION. llil CHAP. V. OF INDORSATION. 1 HE Utility of bills consists, in a great measure, in the ease and despatch with which they may be transferred from one person to another by indorsation, so called from its being generally written on the back of the bilL An indorsation is made, either by the endorser's writ- ing and subscribing an order to pay the contents of the bill to some particular person mentioned by name, which is styled a full indorsement •, or by merely sign- ing his name on the bill, and delivering it to the in- dorsee, or person to whom it is indorsed, whicli is termed a blank indorsation ; and both equally vest a right in the indorsee to demand payment of the bill from the accepter. Blank indorsations are more fre- quent than full onesj b'icause, if every indoisemont was H '? if 132 OF INDORSATION. in full, the back of the bill would soon be filled up, and its negotiability thereby circumscribed 5 and there would be no room for receipts, for partial payment?, &c. But as a blank indorsation gives a full right to demand payment of the contents, it would, perhap?, be prudent in the indorser to fill it up as soon as pos- sible, in order to avoid the risk he may run in the e- vent of the bill being lost, and getting into the hands of a bcna jide holder. * Bills are generally transferred by indorsation, after acceptance, and before the period of payment ; but they may also be indorsed before acceptance, or after they are due. It would appear, too, that bills may be indorsed away even after being protested, * though; certainly, no transference in this way can take place afrer vegistration of the protest \ ^ and to allow prc;:ested bills to pass by indorsation, might. » Beawcs, n. 17*5.— MacDowali's Inst. B. I. T. 13. § 18, Ifi ,r«ancc, not only blank indorfations are null, but all indorfatioa* muft be datsd ; and antedating is prohibited under the penalty of beinf profecutcd for fraud. Ord. of 1673. art. 43, 26.-— The rigour of the law, with regard to blank indorfations, is now, howcrcr, fotwcwhat re- laxed. BoucLer, Inst. Com. 1025J. * 1787. MacAdara a. Mac William, Fac. Col. No- 334- P-5H- 3 Erfk. h. 3. t. a. § 31. — There is a cafe collected by Edgar, p. 52, where a bill was irdorfed for value, after regiilration of the protcft, and the indorfee purfued the indorfcrs for rccourfe, which the Court refufcd, not upon this ground, but becaufe the indorfee failed in due ncgoriation. 1 724, MacLeod a Gordon. — In the Diftionary, the date is cironcoufly flatcd to be 1 7 64. bif INDORSATION. ISS hiight, in many cases, lead to very improper and un- just transactions. A drawer, or indorser, cannot, in the character of indorsee, maintain an action against the accepter, where the indorsement is after the refu- sal of payment j because, when a bill is returned un- paid, either On the drawer or indorsers, its negotiabili- ty is at an end. * In an action, by the indorsee of a promissory note against the grantor, where the note appeared to have been noted for non-payment, and in- dorsed afterwards, the grantor v/as admitted to show that the note was paid, as between him and the payee, from whom the indorsee received it. ^ The right to a bill is sufficiently transmitted by the indorsement, whether delivery has been made or not j and the indorsee may claim it though found among the effects of the indorser at the time of hie death. <* To make a bill indorsable, it li net necessary that it tontain the words * to order= ' ' An indorsement to pay to the order of a person, is the same in effect as an indorsement to pay to that person or order, and he may pursue on such indorsation in his own name ; but nd effectual indorsation can be made, except by H 3 the * Kyd, p. 194. * Ibid. p. 284, 195. « 1787, Carrick a. Kay, Dt€t. v. 4. p. 414. ' 1726, Crichton<7. Gibfon, Ibid, v. i* p. 96.— Erik. b. 3. t. 2. § 280 J 5* at INDORSATION. the owner of the bill or his agent. An indorsation of a bill, by a person of the same name with the person Entitled to transfer it, was found of no effect, (except against the person indorsing it, and subsequent in- dorscrs), though he who had the right to indorse was hot particularly described in the bill. * When a bill is indorsed after the term of payment, it is payable on demand ; and it is only necessary for the holder to present it for payment as a letter of cre- dit-, and, if payment be refused, to notify the refusal to the indorser within a reasonable time. ' Indorsations are presumed to be for value, whether value received be expressed or not, unless the con- trary be proved by the writ or oath of party j * and hence, if the indorsee cannot make good this payment from the accepter, he has recourse not only against the drawer, but against the indorser for the recovery of that value; and if there be several indorsers, he may insist for relief against any one of them. An indorser, however. Is freed from any claim of recourse if he subjoins to his indorsation the words ivitJwut recourse. ' Scoring the indorsation reinvests the indorser in the same * Bayley's Sum. p. 36. ' 1749, Forbes a. Young, Killcer. No. 22. p. 87 * 17 1 5, Aucliinleck a. Miller, Dift. v. I. p. 99. and ch. 3. p. 88. > Erflc. b. 3. t. 2. $ 28. OF INDORSATION. 135 same rights that he possessed previous to passing the bill. An indorsee, after having protested a bill against the drawer and others concerned, for non-payment, re- turned it to the indorser w^ith his indorsation scored, and he, again. Indorsed it to other indorsees, who gave in the protest to be registered in their name for exe- cution ; it was found that the indorser was reinvested by the first indorsation having been scored, and the protest was allowed to be registered. ^ Indorsations of bills of exchange are more privi- leged than bills themselves ; date and place are ordi- nary requisites of bills, but indorsations and receipts on bills are sustained without being dated. When an indorsation is not dated, the legal presumption is, that it is of the date of the bill ; * and if it be dated, it is to be held as of that date till the contrary be proved. ^ After indorsation, the bill carries a right to the sums contained in it, free from all burdens and exceptions but those that are marked on the bill itself. ^ No re- ceipt or discharge, therefore, by the payee or original H 4 creditor. 3 1752, Fairholms, Kilker. No. 28. p. 91. Dift. v. 3. P- 77- * 1709, Roffie a. Ogilvie, Forbes, Dec. p. 347. — 1712, Smiths. Home, Dalrymple, No. 93. p. 130. s 1794, Thiftle Bank a. Leny, Bell's CoUedlion of Cafes for 1794- • Smith a. Kome, ut fupra. 136 OF INDORSATION. creditor, written on a paper apart, can secure the ac- cepter from paying a second time to the indorsee, tliough the indorsation should be posterior to the re- ceipt or discliarge. ' And although a bill should have been granted without value, or though the accepter should have a good ground of compensation or set-ofF against the drawer had the bill continued in his hands, " it is of no avail against the indorsee, whose right can- not be affected otherwise than by what appears on the face of tlie bill itself. But if the accepter shall prove by the indorsee's oath, either that the bill was in- dorsed to him for the indorser's own behoof, or that he the indorsee paid no value for it, the indorsee is justly accounted as but a name ; and the common rule, which holds in other obligations, applies, sus- taining all exceptions against the indorsee that arc pleadable against the cedent or original creditor. ^ The oath of the indorsee, with regard to the value he gave, must be special. J. Swan having made a reference to the oath of S. Swan, with respect to the oncrosity of an indor!^ation of a bill : the latter de- poned, in general, * that he paid value for tlie indor- sation. ' 17145 Fairholm a. Cockbum, Dift. v. i. p. 98.-— 1778, Burnet a. Ritchie, Did. v. 3. p. 82. Er/1<. * 1740, Nielfon a, Bruce. — 1741, Clark a. Stewarty Dia. V. 3. p. 81. ^ Edk b. 3. t. 2. ^ 3. OF INDORSATION. 13"? Ration, aild was an onerous indorsee. ' But being re- quested to mention particularly what the value was, he refused to give any more special answer. During an action which depended on that point, between S. Swan and J. Swan, the former died ; and after- wards, his heir having been made a party, the Lord Ordinary, sustained the oath as a sufficient proof of onerosity ; but the Court altered that judgment, and found that S. Swan was not entitled to the privilege of an onerous indorsee. ' If the indorsation has been fraudulently devised between the drawer and indorsee, to preclude the ac- cepter's defence, a proof of the circumstance will be allowed •, for though bills, when in the possesion of fair and onerous indorsees are, like bags of money, liable to no exceptions arising from the fraud of ante- rior holders ; yet, a collusive transference ought not to be attended with the same privileges, * It is also sufficient to plead against an onerous indorsee, that the bill was originally obtained by violence, and the terror of imprisonment ; for it is of no importance in what shape the document appears, if it be desti-' tute of those qualities that are essential to every obli- gation ; and no obligation extorted by force or fear, is, or * 1780, Swan a. Swao. Fac. Col. No. 286. p. 441 See alfo Fulton a. Johnfton, Did. i. 105. * 1785, Corrie a. Callcndar, S-.c. Did. v. 3. p. Si- 138 OF INDORSATION. or ought to be, binding on the grantor. * In the same manner, a bill originally granted for an unlawful con- sideration, is of no force against the grantor, to whom- soever it may be afterwards indorsed. A bill, for in- stance, given for a game debt above 51., contains such a vitium reah\ as to render it ineffectual, even in the hands of an onerous indorsee. ^ But if the bill be indorsed 3 1776, Willocks a. Callendar, Dift. 3. 81. 1787, Wightman a. Graham. Fac. Col. No. 9. p. 16. * Mor. Dift. p- 15C9. — No direfl decifion upon this point appears to have been collecfled. It is not, therefore, exaftly known what were the principles upon which the Court proceeded. It may, however, be inferred, that the intention was to crufh, as far as pofUble, gambling tranfaftions, by annulling every document given for a gaming debt. But though the holder cannot recover from the original grantor of the bill or rote, he may do fo either from the other indorfcrs who have received value and pafled the bill, without knowing any thing of the purpofe or confideration for which it was at firll given, or from the drawer who was privy to it. For as every indorfalion of a bill, con- ftitiites a new and fcparate contract between the indorfcr and indorfee, independent of that between the drawer and accepter, the bill, though void on the original tranfaiftion, and bitueen the original parties, may be fufticiently binding as to fubfcqiient ones. A bona Jide indor> fee, therefore, who has given value for the bill, ought, at all events, to have an aftion upon it againft the indorfcr from whom he deriv- ed the right, and all preceding indorfcrs. The objection to a bill, that it was granted for an unlawful confideration, may be very good in the mouth of an accepter ; but could not, with any propnety, be pler\rlcd by the drawer who !.ad indorfcd away the bill for value. If this were allowed, the law rendering bills for game debts incffeftual, even in the hands of an onerous indorfee, might be prodiiflivc of more mifthicf, than it intended to repiefs. It would, in faft, be ppciiifig a door for f^'irrlHng ar.d fraud, and would totally deftroy the OF INDORSATION. 139 indorsed away before acceptance, and is afterwards accepted in the hands of the indorsee, it ought to bind both the accepter, and the drawer indorser ; for the former, by accepting the bill in the hands of a third party, homologates the right of that party to de- mand payment from him. ^ In the case of Perchard and Brock a. Breckenridge, &c. a bill for smuggled g-oods the confidence which is fo neceflary for the cxercife and promotion of commerce. In fome of the Engliili cafes, however, it would appear, that a bill granted for an unlawful confideration is void ab initio An aftion was brought by an innocent indorfee of a gaming note, who paid a valwa- ble confideration, againfl the drawer, to whom the money was lent, and it was held he could not recover, Bowyer v. Brampton, a Str. II55. And the law is thus dated by an Englifli writer. If a bill of exchange or note is given in confequence of an ufurious contract, it is abfolutely void when in the hands of an innocent perfon, who may have taken it in the fair and regular courfe of bufinefs, without any notice of the ufury ; and evidence of ufury will be a good defence in an a£\ion brought upon fuch bill or note againft the drawer, accepter, or indorfer. So, in cafe of gaming debts, the borrower may be a wit- refs, though the money is not paid, if the ufury neither affe^ls the debt, nor avoids the contraft; and where the matter is doubtful, the objeOion (hall only go to his credit, and not to his competency as a witnefs. Manning, Law of Bills, p. 65. It is evident, however, that upon the common principles of juftice, as well as of expediency, the holder of a bill ought in all cafes to have an a£tion againft the indor- fer, to whom he has paid value. — Kyd. p. 283. — Ord on the Law of •Ufury, p. 133.— Chitty, 53. J Old on Ufury, p. 133. If a bill is given for money won at play to the winner, or order, and the winner indorfes it to a ftrangcr for a juft debt, and the perfon upon whom the bill was drawn accepts it in the hands of the ftranger — the accepter would be liable, and the indorfer would alfo be liable to fuch indorfee. Com. Rep. 6. 140 OF INDORSATION. goods was held good in the hands of onerous and bona fide payees, in whose favour it had been originally drawn and accepted j '' and from the principle of the decision, tve may presume, that the bill would have been so in the possession of an onerous indorsee. This, however, is rather inimical to the doctrine which the decisions on analogous points have a ten- dency to establish, viz. that a bill granted for an un- lawful consideration, Is ineffectual against the grantor, even in the hands of an onerous indorsee. If tlie consideration for which a bill was originally given, was not illegal, and the bill is afterwards indorsed for an unlawful consideration, this cannot affect the right of the indorsee to insist against the accepter ; however, it may operate against his claim on the indorser. ' It 6 1 791. Bell's Caf. p. 141. — In this cafe it was found that the holders were bound to anfwer every queftion relative to the onerofity, and tending to (how the nature of the tranfaftion. n Parr-o. Elcafon i. Eaft. Rep 9Z.— A bill of exchange was in- dorfed over by the payee, for an ufurious confideration ; and the in- dorfeci negkaed the bill, which was afterwards paid to the aflignees under the bankruptcy of the original indorfccs (being fubfequent to their indorfemcnt) in fatisfaftion of a debt due to the bankrupts' ef- tate. Lord Kcnyon was of opinion, that the afTignees had a right to proteft their pofTertion of the bill, by the title of the party from whom they received it in payment ; who was an innocent holder : and that the bill being valid in its inception, the ftatute of wfury did not apply to that cafe ; and when th^c cafe came again before the I Conn, OF INDORSATION, HI It is no good defence against an indorsee, that the ]jiU was elicited without value from the accepter, when intoxicated, ^ as drunkenness is but a temporary incapacity, created by the accepter's own fault j and to admit of such an excuse, would tend to encourage an improper vice, and afford a ground for quarrelling bills on the most captious pretences. Neither is it a sufficient reason for refusing to pay to an oneroui^ indorsee, that an accepter who admits his subscrip- tion, and does not allege previous payment, pleads that the bill is prescribed, and that it had been ac- cepted solely for die accommodation q{ the drawer ; as the right of the indorsee cannot be affected by the Cause of granting the bill, and the debt, (at least it was so found), being as much due as on the day thq bill was accepted. ^ A creditor to whom a bill was indorsed in security of a just debt, was found not to be affected by a back letter of tlu; iudorser to the accepter of the bill, more than if he had taken the bill in full payment. But in so far as a bill stands in the person of an indorsee as trustee for the indorser's other creditors, whose debts were .Court, on a rule to (how caufc, (although it was argued, that as the bankrupts could tot have maintained an a^ion againfl the firft indor- trr, a title could not be derived through him to the affignces), the rule was difcharj:ed. Ord, 139. 8 1736, Wiifun, Sec. a. Nifbet, Diet. v. 1. p. 98. ' 1800, Philp a. Milne, Fac. Coll. N' i^S' P- 349'- 142 OF INDORSATION. were contracted prior to the date of the bill and the trust, a back letter to the accepter will operate against these debts ; because, such creditors cannot be said to be onerous indorsees, or to have lent their money on the faith of a bill which was not in existence, or assigned for their behoof, till after the debts were contracted. * A person who had granted an obligation for bills in- dorsed to him, was found, notwithstanding, to be an onerous indorsee, and not obliged to allow for, or ad- mit, partial payments not marked on the bills them- selves, unless in so far as he had agreed to do so. * A bill may be indorsed, though the holder has written on the back of it, that he had drawn a sepa- rate bill for the amount, if that bill be dishonoured j ^ and an obligation contained in a bill, distinct from the bill itself. If it be not of such a nature as to vitiate the bill, is transferable by indorsation. * But as in- dorsation is a relative writ which must stand or fall with the bill, any clause in the principal which ren- ders it void, must of necessity annihilate the acces- sory obligation. Thus, a bill with annualrent and penalties * 1757, Douglass. Elliot, Fac. Coll. N^ 8. p. 13. * 1778, Burnet a. Ritchie, Dift. v. 3. p. 82- 3 1 7 14, Mitchell £r. Brown, Mor. Dift. p. 1469. * 1727, Grierfon a. Earl of Sutherland, Dift. v. r. P- 97- OF INDORSATION. 14-3 penalties being found null, an indorsation of it, though bearing for value received, was ineffectual. ^ To constitute an indorsation, no particular set of words is necessary, either to convey the sum in the bill completely to the indorsee, or merely to appoint him agent to receive payment in behalf of the indor- ser. In both cases, it is sufficient that the indorser's name be written on the back of the bill by himself, or by some other person duly authorized by him. But an indorsation may be restricted, as where it is made * pay to such a person for my use, ' which prevents a blank indorsation from being filled up by the indor- see, so as to convey any interest in the bill to himself, and from transferring it to another, so as to give him a right of action either against the person imposing the restriction, or any of the preceding parties. By an indorsation of this sort, the indorsee acts merely as agent or procurator for the indorser, and, according to some writers, payment to him may be countermanded by the proprietor of the bill -, '' but according to others, and apparently with more reason, it cannot. ' In England, it has been ascertained, that any indorser may restrain the negotiability of a bill, by using ex- press 5 1730, Thoirs a. Frafer, ib'id. p, 96= * Molloy, b. 2. ch. 10. ^ 2Z. — Mar. 72. — Scarlet, ch. 16. R. 6.— Scac. $ 2. gl. 5. n. 450. ' Beawes, n. 219. — See alfo Poth. n. 165, 188. Jil- OF INDORSATION. press words to that effect, as by indorsing it * pay- * able to J, S. only, ' or * the within must be credit* * ed to J. S. i ' or by any other words clearly indi- cating his intention to make a restrictive or limited indorsement. ^ After a bill has been paid, no indorsation can take place so as to affect the accepter or any of the parties who would otherwise be discharged i nor can an in- dorsation be made after acceptance, for less than the full sum in the bill j for, were it otherwise, tlie ac- cepter or drawer would be liable, upon one entire obli- gation, to as many actions or diligences as the payee or indorsee might think fit to split the sum into by partial indorsations. ^ But where, before acceptance, a bill is indorsed for part of the sum for which it is drawn, the accepter may, by his acceptance after this indorsation, subject himself to pay according as the bill stood at the time of the acceptance ; and where part of the bill has been paid, it may be indorsed for the remainder.* When a foreign bill drawn in sets is indorsed, each part must be delivered to the indorsee, otherwise the same inconveniences may follow, which, as before stated, may arise from neglecting to deliver each of them to the payee. In « Cl.itty, p. 120. — Kyd, p. lOO. — Bayley, ^^. 9 Kyd, 1 09. * Chitty, 120, 121. OF INDORSATION. 14: J In the event of a bill blank indorsed being lost, the person entitled to it should immediately give no- tice thereof to the accepter and all the antecedent parties ; ' and if it be a note transferable by mere de- livery, public notice of the loss ought to be given* The draw^er of the bill is, in this case, obliged to grant a new bill to the payee, upon his finding suffi'- cient security that no loss or damage shall accrue to the drawer on account of the first. ^ An onerous indorsee, however, is ehtitled to payment of a bill from the drawer, although it has been lost by, or sto- len from, the holder. Marshall, for Carrick Brown & Co., bankers in Glasgow, drew a bill bearing to be his * first of ex- change, ' on Moffat Kensington & Co., their corres- pondent in London, payable to Millar & Co., or or- der. It was indorsed by Millar & Co., and, after pas- sing through several other hands, came into possession of Wcatherall & Geering of London, whose clerk had his pocket-book containing the bill stolen from him, as he was carrying it for acceptance. The theft was notified in the Daily Advertiser ; but the bill not be- irtg recovered, Marshall granted a second, * his first * of tlie same date and tenor not being paid, ' on re- ■'■ ceiving ' Beawes, n. 179. — Poth. n. 132. 3 Potb.^n. 130, 131.— Mar. g©.— S^av. totn. 2. liv. "b. 5.— Beawes, n. jif. Ii6 OF INDORSATION. ceiving an obligation from Weathcrall & Geering, to indemnify his company iigainst the appearance of tlie first. The first bill, with seven blank indorsations on it, was presented the day before it fell due, to Lambton & Co., bankers in Newcastle, by the last indorser, witli whom they were totally unacquainted. They discounted and remitted it to their correspond- ent in London, who presented it to Moffat & Co. for payment, on the day it fell due. This was refused, as the second bill had been previously paid. The bill was therefore protested by Lambton & Co., and 2 charge given to Marshall for payment. In a suspension, appearance was made for Wea- therall & Geering, who, with Marshall, pleaded, that Marshall, in granting the second bill, acted ac- cording to established practice; and as the loss must fall either on Weatherall & Geering, or Lambton & Co., it ought to be borne by the latter, who, in dis- counting the bill to an utter stranger not recoinmendeii to them, transgressed a rule of bankers which is very salutary in preventing persons acquiring bills mala Jid^ from obtaining payment ; and particularly after the advertisement in the newspaper, the discounters couid not be considered as without blame in the transaction. The Lord Ordinary, in respect the discounters paid bona fide full value for tlie inilorsation to the bill, and that it was not offered to be shown they were in the knowledge oi the bill having been st«)len or lost, found OP INDORSATION, 1 17 found the grantor liable to pay it, reserving to him relief against the indorsees, by who-^e clerk it was lost. To which judgment the Court adhered, on the gene- ral ground, tliat there is no rc-i vi/ulicatio against oner- ous holders of bills or bank notes. * Another case, regarding a lost bill, was decided in England in 1801. A bill, of the following tenor, * March 30th, 1801. — ^Fifty days after date, pay to * the order of Mr Thomas Stokes, five hundred * pounds, value received. "William Vasey. ' was ac- cepted by the Southwark Banking Comparty, and was indorsed by the payee to William Speirs, who had the bill stolen from him with his name on the back of it. It then passed into the hands of a person who de- scribed himself as J. Warren, who got the bill dis- counted by the Richmond Bank. The discounters brought an action for payment of the bill against the I 2 acceptel's, * 1799, Lambton & Co. a. Marfhall, Fac. Coll. No. 13a. p. 502. This dccilion appears to be in lome degree incompatilile with tiie ll- cnrity and confidence of merchants, who, in their foreign bills, pene- Tilly draw three of the fame tenor and date, only one of which is payable, while the others arc unpaid. Were a needy payee to injorlo away the whole fct for value, or, what amounts to the fame thintr, were two of the bills to be loft, and afterwards to come into the hands of onerous and bonafd: holders, according to the principle of the '7^3> J'Jurnals of the Houle of Lords, * Chitty, p. ISS' 162 OK PAYMENT. tiated, an assignation to an Infeftment, taken by the holder in security, will not bar his action of recourse once established by the due negotiation. * When a foreign bill is drawn payable in a foreign country in foreign coin, the value of which is depre- ciated by the government of that country, the bill is payable according to the value of the money at the time it was drawn. ^ When payment is made by a draft on a banker, if the person receiving the draft does not use due diligence to get it paid, tlie person from whom he received it will be discharged, but not otherwise, unless the holder expressly agreed to run all risks j and in England it has been decided, that the act of writing a receipt in full will not be evidence of such an agreement. ' The safest plan undoubtedly is, not to part with the bill till the draft be paid. ^ A bill or note was granted for the price of rigging a ship. The grantor afterwards drew a draft for the amount, payable to the debtor to whom he had grant- ed the bill. The debtor finding little chance of get- ting 5 17 1 1, Nicolfon a. Morifon, Did. v. i. p. 101. « Chitty, p. 154. 1 Jbid. It was, however, fince decided, that a bankor having a bill remitted to him to picfent for payment, was jullified in giving it lip, on rc^;civing a check for the amount on another banker, although. the check was dilhonourcd. 6. T, R. II. Manning, p. 92. Chitty, did. 8 Mar. p. 21. OF PAYMENT, 163 ting payment of the draft, pursued his creditor in the original bill or note, and an action was sustained on it. ' A draft given by an accepter on another person in payment of a bill which was delivered up to him, does not prevent recourse upon him as drawer of the draft, if it be duly negotiated and not paid. ' On payment, the bill is generally delivered up •, but it is not well ascertained whether the person paying can insist for a separate receipt or not^ It appears but just, however, that a receipt on the bill, which needs no stamp, ' should be given if demanded. When the bill is paid by an iadorser, it is necessary that he have a receipt to enable him to operate against the accepter and previous indorsers ; which receipt is usually taken on the protest, and entitles him to regi- strate the protest, and to proceed with diligence in his own name. ' A bill having upon it a receipt for pay- ment in general, is presumed to have been paid by the accepter. Young accepted a bill drawn by R. Steel & Co., payable one hundred days after date, which the draw- ers afterwards discounted with the Falkirk Banking K 2 Company. ^ Ofwald a. Gordon, Forbes, Dec. 511. * I7I5> Johnfton a. Murray, Bruce, No. 48. p. 61. * 23d Geo. III. c. 49. § 4, 7. 44th Geo. III. c. 9^, § 2,8. ^ I2th Gco^III. c. 72. § 45. 16i OF PAYMENT. Company, "\\1ien it became due, it was retired by . T. Steel, one of the partners of Steel & Co., who took 2 receipt from the cashier of the Bank in these terms, * Received payment of the within. ' T. Steel died soon after; and the retired bill having been found in his repositories, it was assigned by R. Steel, his partner, to Ferguson, in security of a Company debt. Ferguson raised an action for payment- against Young the accepter, who pleaded, that he had put into the hands of T. Steel the money with which he had retired the bill ; and, in support of this allega-- tion, he founded on the nature of the receipt granted by the Bank, contending, that wherever a bill hppears with a receipt on the back of it in general terms, not mentioning by whom it was paid, the presumption of law is, that it had been retired by the accepter, the proper debtor, or at least with his money. The Couit sustained the defence. * But, as has been already mentioned, separate re- ceipts for partial payments of a bill will not militate against a person to whom the bill is afterwards ir^ dorsed. * Payment, when made by tlie accepter, extinguishes his * 1793, FerguffDii a. Young, Fac. Coll. No. 8c. p. 175. — Chitty, 209. - 1 7 14, Fairholm Batchin a. Orr, Dift, v. 3, p. 87. €J? PROTESTS. 171 CHAP. VII. OF PROTESTS. HEN a bill of exchange is presented for accept^ ance, or payment, and refused, it ought immediately to be put into the hands of a notary-public and pro- tested, and intimation of the dishonour given to the drawer and indorsers, which secures the holder's right of recourse against them. The protest is a forma! step of diligence which cannot be dispensed with, or the want of it supplied by witnesses or oath of party, or any other act. ' It ascertains that no improper de- lay took place in negotiating the bill j that it was duly pre- ' Stair, b. i. tit, xi. § 7. — Sav. torn. I. liv. 3. cli. 6. -Edit de Commerce, tit. 5. art. 10. -71 OF PROTESTS. presented by the holder ; that acceptance, or payment, was refused j and that the holder rcoerves his right of operating relief against the other parties concerned. Protestirig is not necessary to entitle the creditor to an action upon an. accepted bill against the accepter, as the accepter has nothing to do with the negotiation of a bill, and action is always competent against him, whether it be protested or not j ' but without that formality, the holder cannot have the benefit of sum- mary diligence. Protests vary in their form in different countries, but they should always be conformable to the custom of the country where they are made, and executed ac- cording to the laws and usages there practised. ' In this country, a protest, in order to its being re- ceived in evidence, must be written on paper stamped with a proper stamp, the amount of which at present is three shillings, by the 4.4. Geo. III. c. 98. $ 8. ♦ In every protest, the bill, and all the indorsements, if there be any, must be transcribed verbaturiy and prefixed to the instrument, and the reasons specified why the bill was dishonoured or protested. * All bills » Molloy, b. 2. c. IQ. ^ 17. 31. 3 Poth. n. 155. — Boucher, n. 1463. * For the forms of Protests, and of the Azcc^i^nccfupra proteft, fee Appendix No. 3. s Aa l6St.— Ord de Com. tit. 5. art. 9. OF PROTESTS. 1^3 bills ought to be protested for non-payment on th* last day of grace, if they are not duly paid. A bill cannot be protested against the accepter on the day of payment ; ^ but the protest must be taken within the three days of grace ; ' and where a bill was protested on the day after the last day of grace, recourse was refused, though no damage could be said to have ari- sen by delaying the protest. » When the last day of grace happens to be Sunday, the bill must be protest- ed on the day preceding ; and a bill protested on the day following was found not duly negotiated. ^ When a bill of exchange is, by contrary winds, o-r any other accident, detained so long on the way, that the time of payment is expired, the holder ought, im- mediately on its arrival, to demand payment from the drawer, and, in the case of refusal, protest it for non- acceptance. ' It appears, too, that a bill payable at a day certain, need not be protested till the last day of grace, when a protest for non-payment may at once be taken, without any previous protest for non-accept- ance J « 1788, Charles a. Skirving, &c. Did. v. 5. p. 84. ' 1751, Cruickfhanks a. Mitchell, z'^/V/. p. 83. 8 1758, Tod fl. Maxwell, Fac. Coll. No. 123. p. 228. — 1731, MacKenzie a. Urquhart, Dift. v. i. p. 100. 9 1786, Smith & Payne a. Laing Arthur 6c Co., DlSt. V. 3- P- 83. * Molloy, b. 2. c. ic. <*i 27, 1?* Ot PROTESTS. aiice ; * though, as before observed, a protest for non- acceptance, is, in general, advisable, if not neces- sary. ^ A protest against the drawer of a bill not ac- cepted, for exchange, re-exchange, cost, damage and interest, vv^as found equivalent to a prot«st for not- payment ; though no mention was made, in the pro- test, of non-acceptance or non-payment. * It is not likely, however, that this would be sustained in the present day, when a compliance with the strict rules of negotiation is more rigorously exacted. Protests for non-acceptance may be taken by any person who has the bill in his hand, against the drawee, either at his dwelling place, or, if he be dead, at the house where he last resided ; but protests for non-payment must be taken by the person entitled to receive the money, or by some person duly authorised by him, either at the place of payment, if any place be specified j or, if no place be specified, then in the personal presence of the accepter ; or, it he cannot be found, at his ordinary place of residence. And the instrument of pi^otest must be drawn up and extend- ed under the hands of u notary-public. It is custom- ary, in demanding payment of inland bills or notes, for the * 1749, Jamiefon a. Gillefpie, Kilkerr. No. 23. p. 87. 3 Ch. 4. p. 1 12. * 1699, Vuille a. Richardfon, Fountainhall, vol. 2. P ^4- OF PROTESTS. 173 the notary to make a minute on the bill, of the day, month, and year, and to subscribe his initials •, which is called not'mg. But noting, as distinguished from a protest, is unknown in law, and is merely a prelimi- nary step, from which the protest can be afterwards at any time extended. No noting of foreign bills can take place j for the protest must be instantly made out, and transmitted, with notice, and as evidence, of the dishonour. "When the days of grace are expired, before dili- gence can be used against the accepter, as where a bill is indorsed after the period of payment, though the holder does not protest it, he preserves, as before noticed, ^ his right of recourse, if he presents the bill for payment, and gives intimation, within a reason- able time, to the other parties, of payment being re- fused. Promissory notes may be protested, by the payee, against the grantor j and inland bills, payable to the drawer, may be protested, at his instance, against the accepter, at any time within six montlis after they are due, so as that summary diligence may proceed upon them, against these parties -, but where there are other parties, recourse upon them will be lost, unless the notes or bills be regularly and duly protested in the manner above prescribed. A 5 Ch. 5. p. 134. 176 OF PROTESTS. A protested bill, after registration, cannot be trans-* ferred by indorsement, but by assignation, like other rights ; for no decrees are transmissible by indorsation j and registration is, in the judgment of the law, a de- cree. " By the assignment, the whole privileges com- petent to the cedent or assignor, are vested in the as- signee, who is not subjected to any exceptions that might be pleaded by the accepter against the original creditor in the bill. ' In protests of bills, it is not necessary, either that the witnesses, whose names are inserted in the instru-' ment, should be designed therein, or that they should subscribe as witnesses. Without these formalities^ the protest, with the bill, is sufBciently probative, both against the drawer and drawee. ^ A bill, drawn on a house in London, was found duly protested, though the notary was not present. His clerk presented tlie bill for payment, and returned with the answer to his master, who extended the protest at home, and insert- ed the names of two witnesses, as if they were pre- sent ; this being according to the form and practice of London. ^ A bill may be protested for non-ac- ceptance, . 90. OF PROTESTS. 17T ceptalice, notwithstanding an ofFer has been made of a partial, quahfied, or conditional acceptance, if the holder does not accede to that ofFer ; ' and, if he do not instantly agree to receive it, the dravvee may retract. But if the holder acquiesces in an acceptance for part of the sum, which possibly may be to the extent of the drawer's effects ' in the hands of the drawee, he ought to protest for non-acceptance, as to the resi- due ; and, on receiving the partial payment, when the bill falls due, protest for non-payment of that balance. * Ail bills that have been protested for non-acceptance, ought also to be protested for non-paymerit, when they become due. ^ When a bill is drawn on a person who is either unkn~ wn or cannot be found, it may be protested at the market cross of the town in which he was described to reside j and the protest should ex^ press, that strict search had been made for him. * A bill being drawn, which bore to be payable at no cer- tain place, and protested at the head burgh of the shire where the accepter had his residence, the protest was found good. ^ If the holder be at a loss to know L which * Stair, ui tupra. , * MoDoy, b. 2. c. lo. § 21, 5 Poth. n. 133. Sav. torn. 2. ch. 14. max. i. Bou- cher, n. 1502. * Mar. p. 133. Scarlet, c. li. r. 13. Forbes, p. I2D. ^ 1745, Creditor'? of Glendinniag a. Montgomery,' Kilker. (Arreftment) N" k6. p. 41. 178 OF PROTESTS. vhich of nvo persons of the same name a bill is drawrf upon, and both refuse acceptance, he ought to protest it against both. ^ When he on whom a bill is drawn, upon the account of some particular person, for whom he does not wish to pay it, has funds of the di'awer in his hands, he ought to allow it to be protested against liimself, and then pay supra protest for the honour of the drawer or indorser. ' The reason of which seems to be, that the drawer or indorser may thereby be in- formed of the drawee's sentiments with regard to the person for, or upon the account of whom, the bill is drawn, and that he paid merely for the honour of the drawer or indorser. Where the original bill is lost, tmd another cannot be had of the drawer, a protest may be made from a copy, especially when the refusal of payment is not for waint of the original, but for some other cause. * If no copy has been kept, a protest must, at any rate,, be taken, in which must be expressed the cause of the bill not being prefixed. ' Besides ^ Scarlet, c. ii. r. 14. ' Sav. torn. 2. ch. 9. § 12. Scarlet, cli. 36. r. 19. Mar. 125. Beawcs, n. 121. 8 Kyd. p. 139. 9 Polh. n. 145. Boucher, 11. (482. A bill being loft, a decree for payment was given on the fimple repre- fentation of the prolel^ and the bill declared null. — n. 1483. OF PROTESTS. 179 Besides the protest for non-acceptance nml non- payment, there is, in England, and some other coua- trie;?, a protest for better sccmity, which is usual when a merchant, who has accepted a bill, becomes insolv- ent, or is publicly reported to have failed ; or when the holder has good reason to believe it will not be paid } in such cases, he may demand better security ; and, on that being refused, cause a protest to be taken to that purpose •, which protest must, as in other cases, be notified by next post, whereby the drawer will be obliged to furnish further security, or make immediate payment, * being bound to the holder in the same manner as if a protest had been taken for non-accept- ance. In Scotland there is no instance of the protest for better security. When a bill is protested for non- acceptance, the holder may instantly charge the drawer and indorsers for payment, contrary to the custom ot most other places, where no demand is competent a- gainst these parties, till the bill becomes due. * But after a bill has been accepted, summary diligence can L 2 only ' Molloy, b. 2. c. lo. § 32, Chitty, p. 128. Mar. 116. » In England, if acceptance be rcfiifftl, nnd the bi'l rfturned, an adlion may be immedidtely commenced againft L..e drawer, though the regular time of payment, according to the tenor of the bill, be not ar- rived. KyJ, p. lit. An aftion lies by the indorke agaiiUl the in- dorfcr, upon a bill of exchange, imrneJiAtely on the non-acceptance of the drawee, though the time for wliich the bill was drawn be not clapled. Manninsj p. "j. ISO OF PROTESTS. only proceed in the case of non-payment. The hold- er must therefore wait the term of payment, and protest for non-payment and recourse, before he can make any demand upon the drawer and indorsers. If, however, the debtor in a bill be notoriously vergens ad inopiam, the holder has the ordinary remedy of an :irrestment in security, which may be issued at his in- stance, and application, by any judge having a compe- petent jurisdiction, upon production of the document of debt J and by this mcanshe may attach the property and effects of the debtor in the hands of any third party, till sufficient caution be found for payment of tlie sum for which the arrestment has been laid. CHAP. OF THE NEGOTIATION OF BILLS. 181 CHAP. VIII. OF THE NEGOTIATION OF BILLS. JLhe doctrine of negotiation is unquestionably the most important in the whole law of bills of exchange, and has given rise to the greatest number of disputes. Though the subject, tlierefore, has been necessarily anticipated, in many points, in the four immediately preceding chapters, it requires, for a fuller discussion, to be treated of under a separate head. The negotiation of a bill consists, either in acts tliat are voluntary on the part of the holder, such as indorsing it away, and uplifting the value, or in those that are necessary. In the latter sense, negotiation implies a right in the drawer or indorsers to require that the bill be duly presented for acceptance or pay- ment j that if payment or acceptance be refused, it h 3 be 1S2 OF THE NEGOTIATION OF BIM.5. be duly protested ; and that notification of the disho- nour shall be duly made to the parties concerned, on whom recourse mny afterwards be claimed. By this right, consequently, a correlative duty is imposed on the holder, to present and protest the bill, and to give the requisite notification to the drawer or in- dorsers. That the holder of a bill, who has been guilty of any neglect, and has not used exact diligence, should lose his recourse against the dravt-er, if the drawee should afterwards become insolvent, is a rule founded on the most equitable principle. For, as the drawer transfers, by the draft, the whole right he had to de- mand payment himself from the drawee, to the person to whom it is made payable ; — if he allow the drawee to fail, when he might, by due negotiation, have re- covered paym.ent, it is but reasonable that he should suffer for his negligence, and not the drawer, whose hands were bound up by the draft. ' But even when the drawee continues solvent, tho law is the same ; for, in that case, the holder can suffer nothing by losing his recourse against the drawer, as he may re- cover the sum from the proper debtor ; and, there- fore, is not to be indulged in an unnecessary action of ' Erflc. b. 3. t. 2. f 34. — 1729, Flo'.vo- a. Pringle, Dift. V. I. p.ioi. — i737j Adam r/. Dick, Home, N'^54. p, 95. — 1758, Tod a. Maxwell, Dier advice, and the bill is protefted for non-payment, it is not neceflary for the correfpondcnt to notify the dilhonour to the merchant at Paris, nor can he claim recourfe upon him. For the merchant at Lyons having given no value for the bill, he is not the proper creditor, and has nothing to do but to return the bill and proteft to his employer, that he may take the proper fleps of nego- tiation, and operate rcconrfc on thofe from whom he derived the bill. But if the merchant at Paris was debtor to the one at Lyons, or if he had remitted the bill to retire another which he had prcvioufly drawn on him, in that cafe the correfpondent, in order to prcfcrve his light of recourfe, is taken bound to ufe exaft diligence in making no- tification, as, by his accepting the prior bill, he had become a creditor of the Parifian merchant, and debtor to the perfon in whofe fa- vour the prior bill was drawn. — Tom. I. iiv. 3. ch. 6. s 1803, Jarron a. Smith, &c. Fac. Col. No. ii2» p. 246. <' 1761, Fairholms a. Sun-fire office, Fac. Col. No. 41. p. 86. 196 Ot THE NEGOTIATION Or BILLS. be bankrupt, ' and whether the drawer had funds in his hands, or not. ^ For though it be a good reply to a drawer objecting undue negotiation, that he had no effects in the person's hands on whom he drew, yet it is no good reply to an indorser, who is not sup- posed to have any effects in the hands of the drawee. Tliore is consequently a material and obvious distinc- tion between the drawer and indorsers of an accommo- dation bill. The former receiving the money, has no right to relief from any one j but if an indorser shall pay, he has a right to operate relief against both the drawer and previous indorsers. This interest is the criterion by which to judge whether strict negotia- tion is necessary or not. Therefore, where bills arc merely granted for the accommodation of the drawer, he is not entitled to plead the want of regular nego- tiation. ' But in so far as onerous and ifcna fide holders are concerned, accommodation bills do not dif- fer ' 1748, Langley /3. Hog, D. Falconer, v. r. No. 160. p. 352. — 1803, Fcrgufon & Co. a. Belfh, Fac. Col- No. III. p. 244. — Manning, p. 42. — Poth. n. I47. — Boucher, n. 1482. 8 1755, Hart ^. Glasford, Di£^. v. 3. p. 84. — 1773» Finlafon a. Evving, ibid. ' 1787, Mac Adam fl. MacWilliam, Fac. Col. No. 334. p. 514. I OF THE NEGOTIATION OF BILLS. 197 fer in the rules of negotiation from other bills. ^ Bills, too, indorsed in security, require to be duly ne- gociated j ' and the holder of a bill granted as a col- lateral security, is liable, like other holders, to strict negotiation. ^ Precepts, or drafts, drawn on factors or agents, in security or satisfaction of debts, must be duly nego- tiated, to preserve recourse against the grantors. '* In cases where the ordinary rules of negotiation can- not be observed, and consequently where they cannot apply, — as, where a bill is indorsed away after the term of payment is past, and is protested against the accepter for non-payment, and the indorser for re- course, — the latter will be found liable in recourse to the holder. * But though bills, indorsed after the term of payment, do not admit of the same strict ne- gotiation as other bills, yet it is incumbent on the holder to notify the refusal to the indorscrs within a reasonable time. ^ Wliere, however, all the debtors M 3 in * 1791, Orr a. Turnbuli, Sefiion papers. — Mor. Di6i. p. 1617. * 1762, Murray a. Grofiet, Dift- v. 3. p. 89. ^ 1 794, Reid 'i. Coats, il/ic/. * Earl of Leven a. Earl of Glencairn, D. Forbes, P- 555- * 1777, Cooper a. Clark, Dift. v. 3. p. Sj. * 1749, Forbes a. Young, ibid. p. 91. 198 OP THE NEGOTIATION OF BILLS. in a bill become bankrupt, and claims are entered on their estates before the term of payment, negotiation, as it can serve no end, is unnecessary ; and the want of it cannot be objected by the creditors. * The notification of dishonour should be specific, and ought to give the particulars of the bill ; such as, the sum, date, parties' names, and period of payment, so as to make it impossible to mistake what bill is meant j and should also express when the protest was taken, and the holder's intention of claiming re^- lief : for, unless the dishonour be notified in a man- ner so distinct as to leave no room for uncertainty, recourse will be lost. * W. MacLean of Inverness, drew upon his son J. MacLean of London, on the 19th November, for 150/., payable twenty days after date, to Hogg in Edinburgh, for value in account with him, as per ad- vice. This bill was sold, blank indorsed, to T. & A. Fairholms of Edinburgh, who transmitted it to John- ston of London, whose name came to be filled up in the blank indorsation j and was accepted by J. Mac- Lean the drawee. The bill falling due on the 8th February, was protested on the 11th for non-pay- ment, and an action of recourse brought against Hogg the • 1 792, Creditors of Mac Alpine a. Parfons, ibid. p. 88. . — 1794* Hanifons a. Chippendale, ibid, p. 89. ^ Sayary, torn. i. liv. 3. ch. (>. OP THE NEGOTIATION OF BILLS. i99 the payer and indorser, who pleaded that the disho- nour of the bill had not been duly notified. To which it was answered for the pursuer, that it had been duly notified to the defender by a letter from the accepter himself, acquainting Hogg of his having been obliged to redraw on him for payment of it, and by the said draft being sent down to J. & A. Fair- holms, factors for the holders, and presented to him fpr acceptance. But as this letter from the accepter did not particularly bear, that the redraft he had given to Johnston the holder was on acount of the bill, but only stated, in general, that in order to retire a bill of his in Johnston's hands of 150/., he had, of that date, drawn on him for that sum, it was not sustain- ed as sufficient notice. The Lords found, that notifi- cation of the dishonour of a bill must be distinct and positive, especially when it is given to an indorser ; as the only purpose of notification to him is, that he may thereby be entitled to operate his relief against the drawer ; and that no other is sufficient than what may put him in safety to sue and attach the effects of the drawer for his relief. ^ It appears, however, that private knowledge of the dishonour is tantamount to a notification, M 4 An ^ 1747, Johnfton a. Hogg, Kilker. (B. of Exch.} N" 14, p, 79, 206 OF THF. NEGOTIATION OF BILLS. An action of recourse was brought against the in- dorser of a bill, of the dishonour, whereof no regular intimation had been given ; yet, from private know*, ledge, the indorser could not be ignorant of the disT honour. The Lord Ordinary found him liable ; which the Court confirmed, and found expenses due. It was observed on the Bench, that when an indorser hears nothing of a bill for some time after the term of payment, he is entitled to presume it is paid : hence, in general, without intimation, an indorser cannot be made liable. But in the present case, the parties saw each other every day, and the w^hole cirr cumstances of the case came to be equivalent to re- gular intimation. The indorser knew, from circum-i stances, that the bill was dishonoured. In particular, he was present when the accepter made a partial payr ment. ' Evidence of notification to the drawer was like- wise inferred, from an acknowledgement of his own in a posterior deed ; wherein, among other sums, he debited himself with that in the bill, to the holder, at the time. Martin, on the 20th December 1764, drew a bill on Kellar, payable to the drawer four months after date. It was indorsed for value to Johnston, and by him to Nisbet, in whose hands it remained till it be* came ^ 1 791, Irvine a. Caddel, Mor. Did. p. 1C17. OF THE NEGOTIATION OP BILLS. 201 came due, 20th and 23d April 1765. Kellar, th« accepter, having become bankrupt about the middle of February preceding, absconded ; and Coulter hav- ing come to have right to the bill, as creditor of Nisbet, brought an action of recourse against Martin the drawer, by vi^hom it was objected that the bill was not duly negotiated, in respect there was no proof of its dishonour being notified. To which it was an- swered by Coulter, that as Martin had acknowledged himself debtor to Nisbet the last indorser for the con- tents of the bill, the notification of the dishonour was thence to be presumed ; and that the notoriety of the accepter's bankruptcy before the bill became due, was equivalent to an actual notification, and excluded the supposition of any damage to the drawer from the want of it. The Court went upon the particular cir- cumstances of the case, and found, from tbe drawer's having acknowledged, in a disposition by him to Nis- bet and others as trustees for his creditors, that he was owing Nisbet the sum of 514/. 17s. 6d., which included the sum in the bill in question, that sufficient evidence was adduced of the dishonour having beeu properly intimated to him, ® But an execution of horning, reduced from infor- mality, * 1775, Coulter <7. Martin, Fac. Col. No. 174. p. 90. 202 OF THE NEGOTIATION OF BILLS. mality, was not sustained as evidence of an intiina* tion of the dishonour of a bill. ' The usual way of notifying the dishonour of a bill, is by a card or letter sent by the holder, when the par- ties live near each other ; or transmitted by the post, when the parties live at a distance. In the event of the notification being denied, it may be proved, in the former case, by the person by whom the letter was de- livered } in the latter, by the person who put it into the post-office j * or it may be proved by the holder's letter-book. But where none of these modes of proof can be had, it would seem that the oath of the holder, or of the agent employed by him, will be received as sufficient evidence of intimation having been given. A bill drawn on a house in London, had been in- dorsed by W. and J. Douglas in Glasgow to Brown, agent in the same town for Douglas Heron & Co., when it was again indorsed to Sir George Colebrooke & Co. in London. The bill being presented to the drawers, first for acceptance and then for payment, both were refused ; upon which Colebrooke & Co. used diligence against W. and J. Douglas, who brought a suspension of it, on the ground that due intimation of 9 1787, The Stirling Banking Company a. Duncan. fon'8 reprefentatives, Bell's Cas. p. ill. — S'-fTion Papers in Signet Hall. ^ rhitty, p. 210. Kyd, p. 275. OF THE KEGOTIATION OF BILLS. 203 of the dishonour had not been made to them. Cole- brooke & Co., the chargers, on the contrary, affirm- ed, that timely notice of both refusals had been given to the suspenders by Brown, their door neighbouT, being communicated to him by the cashier at Edin- burgh, who had received it from London ; in support of which averment, they produced the cashier's let- ters to Brown, with a notandum added to each of them in Brown's handwriting, bearing, that he had read or shown them to the suspendeis. And they concluded, that this evidence ought to be held as suf- ficient j at least, that it might be rendered complete by the oath of Brown. The Court was of opinion, that the alleged mode of intimating the dishonour was suffi- ciently formal ; and that, if the evidence arising from the markings, affixed by Brown to the cashier's letters, were corroborated by Brown's oath, this would be sa- tisfactory evidence of such intimation. And he having given his oath, W. and J. Douglas were found liable.* The oath of a partner, in corroboration of a pri- vate marking of his own, will also be received as suf- ficient evidence of due notification. ^ "When notification is made, it is not necessary for the holder of the dishonoured bill, in pursuing re- course, * 1780, Colebrooke & Co. a. Douglas, Fac. Coll. No. 118. p. 217. ^ 1 781, Douglas Heron & Co. a. Alexander, iliJ. No. 34. p. 59. 204 OF THE KEGOTIATION OF BILLS. course, to return the bill and protest to the drawer, unless he pay the amount. These are the holder's documents of debt, which he cannot safely, and is not bound to part with, until actual payment is received. * * 1 756. Hawkins & Co. a. Cochran, Sel. Dec. No. 1 30. p. 186.— 1760, Coutts & Co. a. Nifbet, Fac. Coll. No. ?62. p, 488, SHAP> OF THE PRIVILEGES OF BILLS. 205 CHAP. IX. OF THE PRIVILEGES OF BILLS. Besides the privileges of bills that we have already had occasion to mention, these documents are peculi- arly privileged in other respects, of which it is ex- tremely necessary that some notice should be taken. It has been shown, * that bills are complete in themselves, without witnesses, or any of the statutory formalities essential to the constitution and validity of other writs. They prove their own dates, whether they be holograph of the drawer or not j whereas ho- lograph deeds of any other description, do not prove their dates, unless attested by witnesses. But though this rule, with regard to the date of bills, be neces- sary « Ch. 3. p. 85. ■J,OS OF THE PRIVILEGES OF BItLS. sary for the security of merchants in their transactions with proper bills of exchange, it seems doubtful how far, in questions with heirs or creditors, it ought to extend to these instruments, when employed merely to constitute, and as vouchers of, debt, such as bills payable to the drawer, and promissory notes. For by antedating notes and bills of this description, the most easy and dangerous modes of affecting the rights of heirs, and defrauding creditors, might be introduced. Heirs, for instance, might be cut off from the plea of deathbed ; inhibiting creditors from the benefit of their legal diligence ; and husbands sued for the per- sonal obligations of the wife, might be deprived of the defence that such obligations had been granted subse- quent to marriage. * For these reasons, apparently, it has been decided, that a bill granted on deathbed does not prove its onerous cause ; ^ and that it is competent to prove by witnesses, against an onerous indorsee, that a bill was granted on deathbed as a legacy, was not delivered, and was not signed by the drawer during the grantor's life. * As * Erllc. b. 3- t. 2. § 22. ' 3 1734, Chriftifons a. Ker, Dift. v. 2. p. 255". * 1757, Farquhar a. Shaw, Kam. S. Dec. No. 137. p. 193. — See alfo Duncan a. His Majefty*8 Advocate* 1754, Fac. Coll. No. 103. p. 152- OF THE PRIVILEGES OF BILLS. 207 As the acceptances of bills, payable at a certain period after date to the drawer, are seldom dated, questions have arisen whether or not the acceptance is in all cases to be presumed of the date of the bill. In a cause that was determined in 1702, the Court re- fused to sustain this presumption, unless it was sup- ported by proof. * But, in a subsequent case, it was found, that an accepted bill proved its own date against the accepter's heirs ; ^ and from this authority, as well as from the analogy of indorsations, it may be considered as a rule, that an acceptance of an inland bill, payable to the drawer, if not dated, will be con- sidered of the date of the bill ; and, where it is dated, will be held as of that date till the contrary be prov- ed. ' What remains to be observed, concerning the pri- vileges of bills, may be conveniently comprised and discussed under the four following heads. Ij-/, Whe- ther bills require intimation ; ^d/i/y How far bills are subject to compensation ; Sdli/, How far bills are ar- restable -y and, 4Mi^, For what period bills retain their extraordinary privileges. I. ' Man a. Wales, Dift. v. i. p. 90. * 1725, Kennedy a. Arbuthnot, Edgar, p. 185. ' 1 79 f, Thiill ' Bank a. Leny— See alfo Norris a. Heirs of Sir John Wood, Di^. v. 4. p. i69. 208 OF THE PRIVILEGES OF BILLS. I. Whether bills require intimation. By the law of Scotland, the possessor of any right may, in gene- ral, assign or dispose of it at his pleasure. By such assignation, the subject assigned is fully vested in the assignee ; and, in personal rights, this transference is completed by delivery of the right assigned, together with the deed conveying it. But as debtors are not presumed to know that their debt has been made over to a third party, and therefore cannot, by the convey- ance, be put in mala fide to pay to the original creditor, it is necessary that the assignation be intimated or no- tified to the debtor, to let him know that he must make payment, not to the first creditor, but to the assignee who has now come in his place. In the as- signation of common debts, this intimation is an es- sential requisite, not only for interpelling the debtor from paying to the original creditor, but for complet- ing the conveyance. Hence, though an assignation not intimated be valid against the grantor, who can- not quarrel his own deed, yet if, before intimation of a first assignment, the assignor shall grant a second one of the same subject to a different assignee, the se- cond assignment, if first intimated, is preferable to the first. Bills, according to our two highest legal authori- ties, ' « Stair, b. I. t. ii. $ 7. and b. 3. t. 1. $ 12 — Erflc* b. 3. t. 5. ^ 6. OF THF PRIVILEGES OF BILLS. £09 ties, require no intimation, but effect a complete trans- ference of the right witliout this otherwise necessary formahty. It is certainly true, that the indorsement of an accepted bill of exchange is a complete assigna- tion of the right to its contents in favour of the in- dorsee ; and, from the privileges of bills, this assigna- tion does not stand in need of being intimated to the accepter. But the doctrine of no intimation being necessary, In any conveyance by bill, seems to be ra- ther questionable. The act of drawing a bill in fa- vour of a payee, is an assignment to him of the funds which the drawer may have in the hands of the per- son drawn upon. But this assignment is not com- pleted, so as to secure the payee, until the bill is pre- sented to the drawee for acceptance, and intimation thereby given to him that the drawer, by the draft, has transferred the debt to the holder j for, until such intimation be made, he cannot be supposed to know of the debt being assigned ; and, therefore, may ei- ther pay to a person holding a subsequent draft, or to another creditor of the drawer who may have at- tached the amount in his hands. Burn drew a bill, dated 30th July 1731, on Dal- ziel, payable to Ker of Houndwood, or order, betwixt and Martinmas then next, which was presented and protested for non-acceptance 6th May 1732. Burn drew another bill, dated 6'th August 1731, upon Dalziel, payable to Parkhill, or order, against N Whitsunday 210 OP THE PRIVILEGES OF BILLS. Whitsunday thereafter, which was indorsed by the payee to Chahners, and protested for non-acceptance 7th August 1731. Ker, the pui^suer of an action, as representative of Ker of Houndwood, to whom the first bill was pay- able, in a competition before the Sheriff, pleaded pre- ference on the debt due by Dalziel, as having the first bill drawn upon him. The Sheriff preferred Chal- mers, holder of the second bill, as having the first protest for non-acceptance ; which decision was af- firmed by the Lord Ordinary in an advocation. ' In this case, it was urged for Chalmers, that the debt due by Dalziel to Burn was not constituted by bill i and no conveyance of a debt, not constituted by bill, can have the privilege of indorsation of a bill, so as to be effectual without intimation. A bill not in- dorsed, would not be preferable to an assignation in- timated before the bill was presented to the debtor, consequently would not be preferable to a bill, poste- rior in date, first intimated. It is of no importance that Mr Ker's bill was first payable -, for the second bil) contained no information to acquaint the persons to whom it was directed that any former bill had been drawn. It was a simple draft, to pay a certain sum at 9 1737, ^" '^' Chalmers, Did. v. 1. p. 97. — Scffion Papers. 6f the privileges of dills. 211 at a certain day. It was presented, and intimated to the debtor, before the prior bill. The first intimation completed the conveyance, whatever was the term of payment j nor can the time when the competition oc- curred make any difference. The protesting of a bill for non-acceptance, is equi- valent to an intimated assignation ; ' and even a ver- bal intimation of a draft is sufficient notice to the drawee. * One might apprehend that the indorsee of an un- accepted bill could he in no better situation than the indorser from whom he derives his right ; and that it to interpfel the dravvee from paying bona fide to a pos- terior order, mtimation be necessary, the necessity holds as much in regard to the indorsee, as to the ori- ginal payee, in whose place he stands. This conclu- sion, however, though it seems sufficiently tenable on reasonable principles, does not appear to be supported by any authority. It has been found, that the indor- see of an unaccepted bill not intimated, was preferable to a posterior arrester who had attached the funds in the debtor's hands. ^ There is evidently, however, no N 2 ground ' 1734., Mitchell a. Mitchell, Dift. vol. i. p. 97.—^ 1758, Gavins. Kippen 5c Co. Fac. Coll. No. 79. ?■ 327- -•■1778, Spotifwood a. MacNeil, ibia. No. 18. p. 33. * 1724, Fairholm a. Gordon, Edgar, p. 20. '' 1698, Ewing ^. Gt'iU>, Founuinhall, ▼. 2. pnii. 212 OF THE PRIVILEGES OP 61LL«. ground of expediency for any distinction betwixt a a p:iyee and an indorsee ; for though indorsations are, from motives of utility, more privileged in sortie in- stances than bills themselves, yet, if intimation be at all requisite to put the drawee tnmalafide to pay to a posterior order or arrester, there is no reason why an indorsee should not be bound to intimate, as well as the person to whom the bill was originally made pay- able. At all events, the consideration of the forego- ing cases more strongly enforces what has already been frequently inculcated, that as soon as a bill or draft is received, it should, without the smallest delay, be •presented by the holder for acceptance •, and, in case of refusal, protested j as, by this means, the holder :lot only preserves his right of recourse against the drawer^ but, by the intimation given by the present- ment and protest, effectually precludes the drawee from paying to another, in case he has funds in his hands ; and a double security is thus afforded to tlie holder for his money. A bill, protested for non-acceptance, divests the drawer of the funds for which the bill was drawn, in favour of the payee, so as to exclude other claimants. * _ But 4 1714, Stewart a. Elliot, Edgar, p. 32.^-Fallopc & Co. of Paris, dcew upon the houfe of Guignes of Leghorn, on the l4tli Mcffi- dor of the year 5 (r. July 1796), a bill of exchange, at fight, for 5200 piaftres, payable to the order of Francis Devink, On the l8th ef Of THE PIIIVILEGES OF BILLS. 213 5ut this doctjrinQ is also liable to exceptions ; for if the d^af^ |)9 for a greater sum than is in the hands of the drawee, and the holder does not, within a reasonable time, limit his demand to the sums acknowledged to be due by the former, these sums will not be attached Of <;aj'ricd by, the draft. K[ogg, in consequence of an order from S. Fraser, dre.^y bills for 15'U. on J. Fraser, who refused to ac- cep,t;,. because the sums in liis hands belonging to S. Fraser amounted only to 551. 7s. 2d. But he offered, for the accommodation of his correspondent, to ho. nour a bill of exchange for 100/. ; which, however, he was not required to do. Hogg took no further mea- sures for 13 months. By this time, S. Fraser had be- come insolvent, after J. Fraser had interposed his N 3 credit of the fame month Fallopc & Co. failed. On the aSth, Neveu & Co. of Geneva attached in the hands of Guignesthe whole fums owing to the houA; of Fallope & Co. The bill, of which Dcvink was the holder, was prefentcd by him for acceptance ; and on the anfwcr made by Guignes the drawee, that his hands were tied up by the attach- ment, it was protefled for non-acceptance. Neveu & Co. afterwards loofcd the arreftment, and obtained payment of the funds belonging to Fallope & Co. Devinlt being himfclf a debtor of the houfe of Ncr veu 5c Co. in an account-current with them, paficd to his credit the aS.ooo francs, the amount of the zicc piaflres for which the bill was drawn. Neveu & Co. having refufcd to admit this, the quellion came to be tried before the Tiibunal of Cammcrce, of the depanmcnt of the. Seine, which decided, that Nciieu & Co. ftiould allow Dtvink credit for the above fnm, which had been carried, by the bill in his favour, drawn on the houfe of Guignes. And, upon an appeal, this judgmciit was affirmed by the Tribunal of Paris, — Journal dv Palais, Boj-.Iif r p. 211. f i-.: OF THE PRIVILEGES e? BILLS. credit for him to a considerable amount. An ac* tion was then brought by Hogg, in which, in order to subject J. Fraser to the payment of 55f. 7s. 2d.^ it was pleaded, That the drawing of a bill of ex- change, or, what is the same thing, the giving autho- rity to make such a draft, is equal to an irrevocable assignment of those effects of the drawer which are at the time in the hands of the drawee. To which it was answered, That if the pursuer had, within a reasonable time, limited his demand to the sums ac- Icnowledged to be due by the drawee, hrs present claim might have been deemed a just one. But it would be attended with the most pernicious conse- quences, if, by such unfinished transactions as here oc- curred, any restraint should be introduced on the free- dom of commercial dealings. The Court sustained the defence, and found the pursuer liable in ex* pcnses. ^ And where the person drawn upon has not money but effects of the drawer in his hands, these effects will not be carried or attached by the draft in prefer- ence to a posterior arrestment of them. Fall & Co., merchants in Dunbar, had in thcii hands a parcel of dry fish belonging to Sinclair, which they had undertaken to transport to Barcelona on Sin- clair's risk, and to account to him for the proceeds Sinclair drew a bill on Fall & Co., payable to Ewing, which s 178(5, Fac. Coll. No. 296. p. 455;. OF THE PRIVILEGES OF BILLS. '215 which t^'C Falls having refused to accept, as tliey ]i,ul no cash in their hands at the time, Ewing protected for non-acceptance. About a month thereafter, and while the fish were Still on liand, Stewart, a creditor of Sinclair's, arrested in the hands of Falls. In a competition that ensued between the holder of the bill and the arrester, the Lords having remitted to the Ordinary to take the opinion of merchants, Whether a bill protested for not-acceptance against a person who has only effects and not value in his hands, is, by the custom of merchants, equivalent to an intimated assignation to these effects, so as to pre- fer the holder of the bill to one who thereafter arrests before the effects be turned into money ? The most noted merchants of Edinburgh made answer, That they always understood, that protesting a bill drawn upon a correspondent, for aiiswcring which he had in his hands a cargo that may produce money, was sufficient to affect such goods, or the produce of them, when turn- ed into cash, without the form of an arrestment ; and that they had relied on bills Fac. Coll. N° 72. p. 315. — Mor. Dec. p. 757^ {note.) * 1752, Dunlop a. Jap, Fac. Coll- N° 5. p. 7. 22* OF THE PRIVILEGES OF BILLS. Macintosh of Antigua, remitted to Allans & Gow of Glasgow, to whom he owed 38/. 12s., a bill for 200/. on Drummond & Co. of London. The bill yras enclosed in a letter, which mentioned, that he meant soon to draw on them in favour of his other creditors. The bill was received by Allans & Gow on 2. Januar)', and was payable 10. March 1791. On the 25. February iTO't, after the bill had been accept- ed, an arrestment was used by Pitcairn in the hands of Allans & Gow on a debt due by Macintosh, which was afterwards acquired by Haddow. Macintosh, on 30. January IT^^', drew a bill on Allans & Gow, in favour of A. Campbell & Co., for 89/. 15s., payable 30 days after sight. This bill was protested for non- acceptance on 12. April, and for non-payment on 15. May ITQl', before which time the bill on Drum- mond & Co. was paid. On the 9. December 1794, Haddow executed a second arrestment in his own name. He afterwards insisted in a process of furth- coming, "^ which was conjoined with an action of multiplepoinding ' at the instance of the arrestees. A. * A procefs of furthcoming is an aftion at the inftance of the ar- refler to make his arrcftment effeftual, by obtaining delivery, or pay- ment, from the arrcftee, of the funds and effe^^s attached in liis hands, ' A procefs of multiplepoinding is an adlion raifed at the inftance of a perfon, in whofe hands the fame funds have been attached by different parties, to have the refpeftivc rights of the claimants difcuf- fcd, and a fandion given to hjm to pay to whoever is found to have the beft right. OF THE PRIVILEGES OV DILLS. 229 A. Campbell & Co. objected to the validity of the- original arrestment by Pitcairn, and maintained, tlr.it the draft in their favour, u-ith the protest taken on ir» after Allans & Gow had received payment of the bil!^ must be considered as a completed assignation to the fund in medio to the extent of the debt : And as the bill was deposited with Allans & Gow, for the pur- pose of enabling Macintosh to draw on them in fa- vour of his otlier creditors, the bill granted to A, Campbell & Co., wliich was prior in date to tlie ar- restment, was to be considered as an assignation inti- mated before the former was executed. The Lord Ordinary found the arrestment at Pitcairn's instance, when the arrestee was only in possession of the in-^ struction (voucher) of the debt, was inept ; and there- fore preferred Campbell & Co. upon the interest pro- duced by them. To which judgment the Court ad- hered. 8 There is manifestly, therefore, a considerable dis- crepancy in the decisions respecting the arrestment of bills. The unreported case of Douglas Heron & Co. r. Malcolm, militates against that of Jamioson a. Leckic •, and the decision in the Creditors of Gordon a. Inne?, is encountered by those in Thorold & Co. a. Forrest & Sinclair, and Haddow a, Campbell & Co. From these last cases, it must be inferred, that arrestment O 3 of « 1796, Haddow a. Campbell Sc Co. Fac. Coll. N' 6, p. 15. 230 OF THE PRIVILEGES OF BILLS. of a bill in the hands of a payee or third party, is in- effectual until the money be paid, and will not exclude the claims and diligence of other creditors. At the same time, it may be deduced from the other deci- sions, that, by the arrestment of a bill deposited with a third party for behoof of the proprietor, a sufficient uexiis is imposed as to render it unsafe for the ar- restee to part with it until the claims of the arrester be discussed. Were the author disposed to hazard an opinion on the subject, he would 6e inclined to think with Mr Bell, tliat there is no obvious reason \rhy a bill may not be attached by an arrestment, so as to secure a preference against all but cnersus indor- sees. But it is well ascertained, that a bill due to the debtor himself, can neither be effectually arrested in his ouTi hands, nor in those of the accepter ; and that indorsation will defeat the diligence. ' IV. For HJuJuit period bills retain their exiraordi' vary privileges. Before the year 1772, it had not been ascertained how long the privileges of bills en- dured. • In the cafe of Smith a. Home, Dalrymple, No. 93. p. 130, it was oFercd to be proved, that an arreftment in the hands of the payee vvas prior to the indorfement by him ; but this was refufed, and th« indoriaiion fuHained, in rcfpe^ it was not alleged that it was gratui- tous, or that the arreflment was known to the indorfer. — See Forbes m. Innes, 1759, Hume, No. 113. p. 182. — Logan a. MacCoulI, Diet, y. I. p. 105. — Ncilfon a. Rufiel!, Diet. vol. a. p. ai8. — And Sin- clair •. Lochhcad, 1798, Fac ColL No. 88. p. ac?. OF THE PRIVILEGES OF BILLS. 231 dured, so as to entitle the holder to an action upon them against the debtor, or what lapse of time or si- lence, on the part of the holder, was to be construed into a loss of his right, sufficient to debar him from pursuing. There was, accordingly, a variety of de- cisions on the point. ^ But to obviate the inconve- niences which had been found to result from the not limiting of bills and promissory notes to a moderate endurance, it was enacted by 12. George III. c. 72, that action and diligence on bills and notes should be circumscribed to six years after the terms at which such bills or notes became exigible. And bills now retain their extraordinary privileges during that pe- riod. * O if CHAP. » See 1766, Wemyfs a. MacNauphton, Fac. Coll. No. 37. p. Cz. — 1767, Maxwell a. Maxwell, ibid. No. 52. p. 92.-1767, Colquhoim a. Duke of Argylc, UiJ. No. 53. p. 93. — 1768, Ker a. Kcr, Hid. No. 77. p. 3*3- 3 1787, Robertfon a. MacGlafhan, Diet. v. 3. p. 91. OF THE ACTION AND DILIGENCE ON BILLS. 233 CHAP. X, OF THE ACTION AND DILIGENCE ON BILLS. The general adoption of bills, in all mercantile and money transactions, has proceeded not only from their being susceptible of a rapid circulation by means of indorsement, and from tlieir affording a greater se- curity to the holder, by being exempted from the ex- ceptions pleadable against other writs, but from their possessing, at the same time, all the privileges of bonds, in the case and expedition with which the debt may be recovered from the debtor, without the formality and delay of an action at law. On common debts, diligence against the person or estate of tlie debtor can only proceed in consequence of the judgment of a court. But in bonds, or other deeds for the payment of 534 OF THE ACTION AND DILIGENCE ON BILLS. of money, a clause is generally introduced, by which the parties dispense with the necessity of an action, and consent that the deed shall be recorded in the books of a court having a competent jurisdiction, and that execution may pass summarily thereupon. In the event of the debtor refusing or delaying to pay, the possessor of the deed has only to give it in to the clerk of court, who enters it among the records, and de- livers an extract or authentic copy of it accompanied with a decree upon which the debtor may be sum- marily charged. No clause of registration could pos- sibly enter into bills, being incompatible with their nature ; but the privilege of summary execution was conferred on them about the end of the seventeenth century, by act 1681, 20th Pari. Charles II., which is as follows. ' Our Sovereign Lord, considering how necessary it is for the flourishing of trade, that bills or letters of exchange be duly paid, and have ready execution, conform to the custom of other parts, doth, therefore, with advice and consent of his estates of parliament, statute and ordain. That foreign bills of exchange from or to this realm, duly protested for not-acceptance or for not-payment, the laid protest having the bill of exchange prefixed, is registrable within six months after the date of the said bill in case of non-acceptance, or after the falling due thereof in case of non-payment, in the books of Council and Session, or other competent judicatures, at the in- stance 1 OF THE ACTION AND DILIGENCE ON BILLS. 235 Stance of the person to whom the same is made pay- able, or his order, either against the drawer or in- dorser, in case of a protest for not-acceptance, or against the acceptor, in case of a protest for not-pay- raent, to die effect it may have the authority of the judges thereof interposed thereto, that letters of horn- ing, upon a charge of six days, and other executorial necessary, may pass thereupon for the whole sums contained in the bill, as well exchange as principal, in form as effeirs ; sicklike, and in the same manner as upon registrate bonds or decrees of registration pro- ceeding upon consent of parties : Providing always, that, if the saids protests be not duly registrate within six months, in manner above provided, then, and in that case, the saids bills and protests are not to have summar execution, but only to be pursued by way of ordinary action as accords. And further, the sums in all bills of exchange bear annual-rent, in case of not-acceptance and not-payment, from the day of their falling due, ay and while the payment thereof. And further, notwithstanding of the foresaid summar exe.- cution provided to follow upon bills of exchange for the sums therein contained, in manner above speci- fied, yet it is leasom to the party charger to puisue for the exchange if not contained in the saids bills, with re-exchange, damage, interest, and all expenses, before the ordinary judge ; or, in case of suspension, to eik the same to the charge, at the discussing of the ' sai(} 236 OF THE ACTION AKD DILIGENCE ON BILLS. said suspension, to the effect that the same may be lU quidated, and decree given therefore, either against tlie party principal, or against him and his cautioners as accords. ' This statute is made applicable to inland bills by act 1696. c. 36. which statutes, enacts and declares, * That the same execution shall be competent and pro-, ceed upon inland bills and precepts, as is provided to pass upon foreign bills of exchange by the twentieth parliament of King Charles the Second, holden in an- no 1681, which act is hereby extended to inland bills and precepts in all points. ' The protest of an accepted bill, therefore, may at once be recorded in the books of Council and Ses- sion, or in those of any other court within the juris- diction of which the debtor lives, and a decree is im- mediately issued, upon which a charge of payment of six days is given, at the expiry of which, if pay- ment be not made, diligence may proceed on the same warrant to secure his property or person. In the case of non-acceptance, execution may pass at the suit of the holder, against the drawer or indorsers. ' This summary recourse against the drawer and in- dorsers, even before the term of payment, if the drawee refuses to accept, seems to have been given, because ^ 1795, Cowyi <7. Key- Di<^. v. 3. p. 84. OF THE ACTION AND DILIGENCE ON BILLS. 237 because the creditor in a bill frequently consents to a distant term of payment, in consideration of the ad- ditional security he is to acquire by the acceptance and responsibility of the drawee ; and when disap- pointed in this respect, it would be hard were he ob- liged to wait the long term of payment to which he consented merely in the view of obtaining that secu- rity. * But after the bill was accepted, the statute 1681 authorised no summary diligence against any- other than the accepter ; and in the event of his fziU ure, the holder could only proceed by way of ordinary action against the drawer and indorsers. To remedy this, it is enacted, by 12. George III. c. 72. § 42, * That from and after the loth day of May 1772, sum- mary execution by horning or other diligence, shall pass upon bills, whether foreign or inland, and whe- ther accepted or protested, for non-acceptance, and upon all promissory notes duly negotiated, not only against the accepters of such bills, or grantors of such notes, but also against the drawers of such bills and the whole indorsers of the said bills and notes, jointly and severally, except where the indorsation is qualified to be without recourse, saving and reserv- ing to the drawers or indorsers their respective claims of recourse against each other, and all defences a- gainst * Erflc. 3. 2. 36. 238 OF THE ACTION AND DILIGENCE ON BTLLH^; gainst the same, according to law. ' And by thct same act it is appointed, § 'il., * That all inland bills and promissory notes shall be protested in like man- ner as foreign bills, before the expiration of the thret days of grace, otherwise there shall be no recourse against the drawers or indorsers of such inland bills^ or against the indorsers of such promissory notes ; and it shall be sufficient to preserve the said recourse, if notice is given of the dishonour within fourteen days after the protest is taken, without prejudice to the notification of the dishonour of foreign bills, to be made within such time as is required by the usage and custom of merchants. ' It is only the principal sum in the bill, with the interest, that can be charged for summarily. The ex- change, when it is not included in the bill, the re- exchange incurred by suffering the bill to be protest- ed and returned, and the expense of diligence, must be recovered by an ordinary action ; because these not being liquid debts, must be previously constituted by the sentence of a judge, that the amount may be legally ascertained ; ^ but, in a suspension, they may be eiked or added to the charge, and decerned for at the discussion of the suspension. Exchange and in- terest are always due for non-payment. Reexchange is due if the holder is obliged to raise money by re- draudng 2 Forbes, p. 197. or THE ACTION AND DILIGENCE ON BILLS. 239 ikawing bills in the place oi> the first draft, for which he pays a higher exchange. ♦ Damage, which is like- wise only due when incurred, is the commission-money paid for procuring the new bill, expense of protesting the old, and postages. But reexchange is by no means double exchange ; it is only the difference between the exchange paid for the first bill, and that paid for the second. ^ The holder cannot claim damage sus- tained on account of his being disappointed in his projects through not-payment, or the loss of some fa- vourable opportunity of making profit by the money. « And, according to the French Ordonnance of 1673, reexchange cannot be demanded, unless it be shown by an instrumeijt, that the holder of the protested bill took up money by exchange at the place where it should have been paid. ' When a bill, too, has been transmitted 4 Sav. torn. I. llv. 3. ch. il. — Poth. n. 64. Reexchange and da- mages on a difhonoured bill from Jamaica is S fier ant., befidcs all cx- penfcs ; on a bill from the Leeward Iflands lo/ifr ivr/»/. ; and from Demerara and Bcrbice 25 per cent. Reexchange from London is 1 ' per tent., and \ per cent, commiflion, beddes other charges. * Forbes, p. 198. — Poth. n. 64. — Old. de Com. tit; 6* art. 7. ff Scarlet, c. ai. R. 10. — Poth. n. 63. — Forbes, p. 197. « Si roer- cator probat fc debitam pecuniam per rolvinit diifta die, certe iucratus cflct decern, audiatur ; verum fi dicat ex iUis pccuniis mercts compa- rafict lucratufque efTct, non audiatur' — according to Straccha, quoted by the laft. " iJav. torn. I. hv. 3. ch. ii. — Ord. tit. 6. art. 7* SlU OF THE ACTION AND DILIGENCE ON BILLS. transmitted by indorsation, and negotiated in different places, the drawer is only liable for reexchange to the place from whence the remittance was made ; and the holder must operate his relief against the indorsers, and the indorsers against each other, for payment of the reexchange between the places where it was ne- gotiated by them. ^ But if, by the drawer's order or permission, the bill was transmitted tlirough different places, or if he g'ave indefinite powers to negotiate, be will be liable for reexchange to these places. ' In England, the drawer of a bill was found liable for the whole amount of the reexchange, occasioned by the circuitous mode of returning the bill through the va- rious countries in which it had been negotiated, as much as for that occasioned by a direct return, although payment of the bill was expressly prohibited by the Jaws of the country on which it was drawn. ^ The principle seems to be, that the drawer is in all cases liable for the damage and expense occasioned by the dishonour of the bill, as he ought not to have drawn it if he were not sure of its being accepted and retir- ed*. At any rate, he is bound to indemnify the payee» from whom he received value, of all loss to which the former <» Boucher, n. 1062. — Sav. torn. i. ch. il. — Poth. n, 67. ' Ord. de Com. art. 6. tit. 6. — Sav. ibiJ. p. 206. ' Chitty, p. 216. — Kyd, p. 140, 141. OV THE ACTION AND UILIGLNCE ON lULLS. 241 former may have been subjected by the refusal mv\ re- turn of the bill. But v/here that loss has been occasion- ed by a fortuitous event, Such cts occurred m the Englisix fcase just cited, there certainly is a degree of hardship in making the drawer responsible for an extraordinary e\- bense which he could neither foresee nor prevent. At the same time, there is a difficulty, and perhaps an equal or greater hardship, in fixing it on any of the other parties, unless the bill has, for some particular purpose, been negotiated by thern cut of the usual and ordinary channel j in v/hich case the draw:er ought only to be liable for what v/ould have been the reex- change on a direct return of the bill, and the indors- crs liable to each other for the difference. By the act 1681, bills are dcchred to bear interest by law from their date, if not accepted ; and from ihe term of payment, if accepted and not paid. 1 htJ payee is supposed to have given value to the drawer at the time the bill was drawn ; and therefore, if it be not accepted, he is entitled to interest from its date. But where it is accepted, and not paid, he can only claim interest from the perio'd of payment to which he consented, in case acceptance was ob- tained. Hence the distinction of the act. As, by this statute, a protest is necessary for procuring dili- gence, it might be inferred that it is also necessary to give a right to interest. In the case of non-accept- ance, a pYotest is required, to ascertain that the bill j» was 242 OF THE ACTION AND DILIGENCE ON BILLS. was presented and refused ; and for the same reason^ a protest for non-payment is requisite, to shew that a demand of payment was made. Properly, there- fore, interest should only be due on bills that arc strictly negotiated, as the protest is the legal evidence of the demand. This, accordingly, appears to be the law of England, ' and other countries. * However, it has been decided, that a foreign bill of exchange bears interest against the accepter from the term of payment, although not protested for non-payment. ^ And where a bill was drawn, payable to the drawer three days after sight, and no demand made upon it for several years, the Court found interest to be due on the bill after the three days, as, in the circumstan- ces of the case, it was construed to be drawn three days after date. * A bill, payable to the drawer at sight, the acceptance of v/hich was not dated, was found ' 9. & 10. Will. III. c. jf. § 2. — 3. & 4. Anne, c.9. — Chitty, p. 214. — Kyd, p. 144. It muft be confeffed, that, in both countries, the law is rather obfcurc on the fubjcft. * In France^ Intereft is only due from tlie date of the proteft. * L'interet du principal et du chang^e fera du du jour du protct. ' Ord. de Com. tit. 6. art. 7. 3 17 1 8, Baynton & Shaw «• 's provided, * That from and after the faid 15th day of May 177a, fummary execution by horning or other diligence, fhall be competent to the indorfee of a bill, al- thou£h the protcft is not in the name of the indorfte craving the dili- gence ; and although the bill is not rcconvcyed to hirh by indorfa- tion, if he produces a receipt for the value, by a^ of honour, or a mifllve letter from the protefling indorfee, mentioning the dilbonour, aprccable to the practice «f merchants in returned bills. ' OF THE' ACTION AND DII ICENCE ON BILLS. '24n is authorised by this act, if a protest lias not been regularly taken within these days. ^ If a bill is pro- tested for non-acceptance, it must be registered with- in six months of the date of the bill, and, if protest- ed for non-payment, the protest and registration must be within six months of the day on which the bill fell due. * The construction of this part of the act, in practice, is, that the bill and protest must be registered within six months of the precise day of payment, and not within six months of the last day of grace. It was found in 1762, Scougal a. Ker, where a bill had lain over twenty months without any diligence done jon it, that the privilege of summary execution, and of barring compensation, were upon the same foot- ing, so as that both should be lost together. ^ But ihe law in this respect is now altered ; and thougli bills cannot be the foundation of summary diligence, unless protested and registered within six months from their date, if not accepted, — and from the day they are due, if protested for non-payment, — they re- tain their extraordinary privileges, in other respects, for six years. ^ Horning cannot proceed on a bill wanting the P 3 drawer's 3 1775, Elliot <7. Richmond, Fac.CoIl. N'' 196. p. 1 32. * 1699, Yuille ^7. Richardfon, Fountaiiilial!, 2.64, ^ Kam. Sel. Dec. 190, 254. ^ lySy, Robertfon a. MacGlafban. 246 OF THE ACTION AND DILIGENCE ON BItLS. drawer's subscription •, for although the bill, being holograpli of the drawer, might be valid without his subscription, yet it would require a proof of its being holograph •, and no horning can proceed but upon write ex facie valid. ^ A bill being indorsed to a merchant in London, * for value in account,' was protested in his name for non-payment, and returned to the inr- dorser, who charged the accepter with horning, and executed a poinding, after receiving advice that the indorsee had died at London some days before the date of the charge. * The Lords reduced the poind- ing, ' though it was pleaded, that in the case of in- dorsations for value in account, the substantial interest remains in the indorser. * Where an accepted bill has been neglected to be protested and registered within the six months, it can only be pursued for by an ordinary action, like any other voucher of debt. And where a bill has, by any accident, been lost or destroyed, an action for proving its tenor is competent to the owner against t]:c ' 1750, A. a. B. Diifl. V. 3. p. 76. 8 1766, Stewart a. Foggo, Fac. Coll. 48. p. 277. — TIic Court, in this cafe, repelled the pica of retention argued for the poinder, upon the authority of the decifions, — 1707, Lceso. Dinwoodic, Fouatainhall, \. Z. p. 402. — and 1745, Creditors of Glcndinning a. Montgomery, K'lkcrran, (A;icftnie.'t) No. 16. p. 44- In thcfe cafes there was a I'.na fidts which did not occur in this cafe. OF THE ACTION AND DILIGENCE ON BILLS. 44'7 the other parties liable, in which he must condescend on a special casus amissionis. ' 9 1780, Campbell a. Cicditois of York BuilJings Company, Fac. Coll. No. 106. p. 200. — A pcrfon having granted a bill to anothei" for goods to be delivered to the accepter, brought, after fome years, an aftion to have the bill returned, the goods not having been delivered. A parole prtjof of this was allowed by an inferior court ; in confider- ing which, the bill was ordered to be returned. The holder fufpended, but did not intimate the iufpenfion till nine years thereafter; when, at the fame time, he charged the accepter on a horning to pay the bill ; and afterwards, during the dependence of the fiifpcnfion, com- pelled payment by caption. He was found liable in damages and ex- jKnces. — I7J5, Ogilvie a- Rcbertfon, Fac. Coll. No. iji. p. 225. P 6 C II A P. OP THE PRESCRIPTION OF BILLS. 249 CHAP. XL OF THE PRESCRIPTION OF BILLS. ivilANT disputes and difficulties were found to result from there being no limited period within which ac- tions upon bills should be brought, and no ascertained space during which they should retain their force and efficacy as privileged documents. It was, therefore, by the 12. Geo. III. c. 72. (rendered perpetual by 23. Geo. III. c. 18. § 55.) enacted, § 37. ' That no bill of exchange, or inland bill or promissory note, executed after the 15th day of May 1772, shall be of force, or effectual to produce any diligence or action, in that part of Great Britain called Scotland, unless such diligence shall be raised and executed, or action commenced thereon, within the space of six years from and after the terms at which the sums in the said 250 OF THE PRESCRIPTION OF DILLS. said bills or notes became exigible. ' The same statute enacts, § 38., * That no bill of exchange, or inland bill or promissory note, which has been or shall be granted, before the said 15th day of May 1772, shall be of force, or effectual to produce any diligence or action, unless such diligence has been or shall be raised, or action has or shall be commenced thereon, before the expiration of six years from and after the said 15th day of May 1772. ' And by § 39. it is provided, * That no notes, com- monly called bank-notes, or post-bills, issued or to be issued by any bank or banking company, and which contain an obligation of payment to the bearer, and are circulated as money, shall be comprehended under the aforesaid limitation or prescription j and that it shall and may be lawful and com.petent, at any time after the expiration of the said six years, in either of' the cases before mentioned, to prove the debts con- tained in the said bills ana promissory notes, and that the same are resting owing, by the oath or writ of the debtor. ' As the action or diligence upon bills and notes, must be raised within six years after the terms at which the sums therein contained become exigible, it has been decided, that the sexennial prescription runs, not from the precise day of payment, but from the last day of grace, as the contents of a bill or note are not exigible O? THE PRESCRIPTION OF BILLS. 251 exigible till then ; * and where a bill was dated prior to the 15th May 1772, but not payable till after that day, it was found sufHcient that action was commenced within six years from the term of payment, as the case had not been provided for by the statute. * To interrupt and preclude prescription, summary diligence in the form pointed out in the preceding chapter, must be executed against tlie parties to the bill ; or, where that is omitted to be done within the time required by the statutes, an ordinary action, founding on the bill as a document of debt, must be brought M'ithin the six years, in terms of the act above recited. By either of these modes, the debt may be constituted against the debtor, so as to bar the limita- tion, and entitle the creditor to recover at any time within forty years, the period of the long prescription., The diligence necessary for this purpose must be complete, and the action regular and formal. The mere act of protesting the bill, or even registering the protest, is not suflicient : ^ a charge of payment must be given. Neither v/ill the sexennial limitation be affected by an informal summons, such as where the * 1793. ^Douglas Heron & Co. importing aH acknowledgment of the debt on the last day of the six years. In this case, it was thought that the sub- scription of the writing, the very day before the pre- scription had run, was a circumstance that afforded satisfactory evidence that the bill was not paid within the six years ; ^ and in the debate that took place on the Bench, there was a pretty full discussion of the doubt stated in the case of Russel a. Fairie, concern- ing the effect of a writing in interrupting the pre- scription of bills. The opinions delivered by seven of the judges, including the Lord President, attribut- ed the same effect to an acknowledgment of resting owing 1 * 1 715* Gordon a. Campbell. Did. 2. p. 116. J 1797, Exe.utors of Lindfay a. MofTats. Fac Coll. No. 23. p. 56. OF THE PRESCRIPTION OF BILLS. 259 bwing made at any time within the six years, as to one made after thfe expiration thereof. A distinction, it was observed, ought to be carefully taken between a bill and the debt created by it; The statute cuts off the bill in six yfears ; but the Legislature by doing so, did not mean to anriihilate the debt at the close of that period. Its existence after the siic years falls in every tase to be determined by the common rules of law. A clear acknowledgment of resting owing after the term of payment of the bill, and Within the six years, certainly proves the debt to be then due, and of course forms a new terminus from which prescription must commence. To give no effect to an acknowledgment of resting owing within the six years, in any case, where there is a possibility of the bill being paid be- fore their completion, would be to introduce an inde- finite and arbitrary course of prescription unwarrant- ed by the statute, the length of which would depend entirely on the time which was to run between the date of the acknowledgement, and the expiration of the six years, Which might be only a year, a month, a Week, or a day, according to circumstances. Other seven of the judges held a different opinion. They thought the statute rested on a presumption of payment; and that, therefore, no acknowledgment within the six years, which did not wholly elide Graham, ' which arose on an indorsation made with- in tlie sixty days ; wherein it was decided, ' that the act ' 1713, D. Forbes, p. 646 — Dalrymple, N^97. p.i36. 270 OF BILLS IN RELATION TO BA>fKRUPTCT. act of Parliament took place, if the pursuer proved that the indorsation was for satisfaction or security of a prior debt, and not for present value received ; ' which implies, that if he failed in this proof, the transaction was goo4-. Many questions occurred re- specting what was to be considered as new debts, or ( 10 BANKRUPTCY curitv, as falling under the retrospect of the act 1696, And the Court unanimously sustained the objection. Though, therefore, the payee or indorsee of an un- accepted hill may complete the transaction by after- wards procuring the acceptance of the drawee, be- cause, by the draft or indorsation alone, the whole right is fully transferred from the drawer or indorser ; yet, it is not safe to grant bills to any person in ex- change for a personal obligation to give security, which may require his interference afterwards to make effectual by a voluntary deed. Payments in cash by the bankrupt within the sixty days, are not struck at either by the act 1621, or 1696.* A person insolvent, discounted, by the assist- ance of his ordinary agent, who did not know his real situation, bills which he had in his possession, to the extent of 272/., and, with the money, paid the debt and interest in a bond for 240/. owing by him to his sister, and was afterwards made bankrupt within the statutory period. The payment was sustained. ^ But no collusive payment made in this way will be consi- dered effectual ; as, for instance, where a bill is dis- counted by the creditor in the knowledge of his debtor's circumstances, and the money applied in pay- ment 4 1733, Buchanan a. Arbuthnot, DiA. v. r. p. 82. 1751, Forbes a. Brebner, &c. Kilkerr. No. 15. p. 62. 5 1760, Bean a. Strachan, Did. v. 3. p. 48. OF BILLS IN RELATION TO BANKRUPTCY. 275 ftient of his own debt ; or, where the bill, with the assistance of the creditor, is discounted in the bank, and the value given in bank notes to the debtor, who afterwards delivers them in payment to the creditor. For these are evidently reprehensible mOdcs of evad- ing the act, and an unfair attempt at obftaining a pre- ference within the statutory period. Where bills were Indorsed by a persoii In Scdtland before his bankruptcy, to his agent in England, who v/as donsiderably in advance for him In a business of selling goods gn commission, and who placed them to his credit, although they did not fall due till after se- questration was awarded against him, they were found to be equivalent to payments of the date of the indorsations. ^ As payments hj/ the bankrupt, are not compre- hended under the term * deeds ; ' so, payments fo him, can In rio sense be viewed as deeds of preference. Bills, therefore, due to the bankrupt, may be paid to him at any time within the sixty days. But by tlie bankrupt statute 33. Geo. III. c. 74. § 29. It Is de- clared, that * after the date of the first deliverance upon the petition (of sequestration), all payments made by the debtor to any ©f his creditors, shall bu void and insufficient to the receivers. In the event ct R2 a ^ 1790, Sandeman & Graliam's Afllgnees a. Stein, Bell's Cafes, p; 8 1 - 276 OF BILLS IN RELATION TO BANKRUPTCY. a sequestration taking place ; and the trustee shall be entitled to recover the money so paid as part of the bankrupt estate. ^ In considering the rapidity of mercantile dealings, and the mutual confidence of the parties, so essential to all commercial purposes, the question is naturally suggested, Whether the transactions by indorsations, drafts, &c. of merchants with their bankers, or with each other, carried on in the course of trade, and without any suspicion of fraud, down to the bank- ruptcy ■J In England, by the 19. Geo. II. c. 32. ' no perfon who is or (hill be really and Lona Jide a creditor of any bankrupt, for or in re- fpe(ft of goods really and bona fide fold to fiich bankrupt, or for or in re- fptdl of any bill or bills of exchange, really and bonafiJc drawn, nego- tiated or accepted by fuch bankrupt in the ufual and ordinary courfe of trade and dealing, iTiall be liable to refund or repay to the aiTignec or aflignces of fuch bankrupt's effate, any money which before the fuing forth of fuch commidion was really and bona fide, and in the ufual and ordinary courfe of trade and dealing, received by fuch per- fon or any fuch bankrupt, before fuch time as the perfon receiving the fame fhall know, understand, or have notion of, that he is become bankrupt, or that he is in infolvent circumftanccs. ' If a debtor, after a fecret aft of bankruptcy of his creditor, gives him his acceptance in difcharge of the debt, he may afterwards pay fuch acceptance to the holder of the bill, though, after the acceptance and before the bill fell due, he heard of the drawer's bankruptcy; the giving, indorfing, or accepting a bill, being confidcred as an immediate payment within the meaning of the ftatiite of I. James I. which pro- tcfts bona fide payments made to a bankrupt, provided the bill is ho- noured when due. — 5. 7. Durnf. & Eaft. 711. . And if a trader delivers a bill for a valuable confideration to ano- ther, previous to an afl of bankruptcy, and forcers to indorfc it, he mayindorfc it after his bankruptcy. Pcakc 50. — Manning, p. 57. OV BILLS IN RELATION TO BANKRUPTCY. 27^ ruptcy of one of them, are to be looked upon in the light of cash transactions, or as falling under the ge- neral scope of the act ? A case of this sort came to be determined in 1791. Stein, an extensive distiller at Kilbagie, had a variety of dealings with Sir William Forbes & Co. bankers in Edinburgh. Sometimes, the bills discounted by Stein being considered as cash, vi'ere immediately car- ried to his credit in his account current ; but more frequently^ no credit was given for the contents of the bills indorsed to or deposited with the Company, till they were paid by those who were immediately jliable for them. Stein, on the 28th February • 788, was rendered bankrupt. On the 29th December 1787, being the sixty-first day before the bankruptcy, the sums due by him to the bank amounted to dtidS/. 10s. 5d. J but tho Company held in their hands bills and other securities deposited by Stein to a much larger amount. During the sixty days, hov/ever, which immedi;itely preceded the bankrup:i.y, Sir Wil- iiam Forbes & Co., having no suspicion of Stein's failure, advanced large sums for him. At the date of the bankruptcy, the balance against Stein was 34<,636/. lis. lOd. Besides, in consequence of bills due by him, which had been discounted by other people at the same banking house, he was debtor to the Com- pany in a further sum of 15,000/. But during the sam.e period, he had deposited bills to the amount of R 3 18,4r5S/. 278 OF BILLS IN RELATION TO BANKRUPTCY. lBj458/. 2s. 4d. ; so that the advances exceeded the deposites by 6,309/. 13s. Id. The sums deposited within the sixty days, being 18,458/. 2s. 4d., were challenged under the act. But the Court were un- animously of opinion that the case did not fall under the enactment, and repelled the objection to the claim of Sir William Forbes & Co. s The decision in this case went entirely upon the specialty that the payments within the sixty days had not only equalled but exceeded the value of the indor- sations •, so that, instead of a preference or advantage being given to Sir William Forbes & Co., they would, if restored to their situation as at the commencement of the sixty days, have been great gainers. ' But so strictly is the statute applied to securities for former debts, that the shortest interval of time be- tween the advance of the money and the granting of a security not originally stipulated or relied on, is fat^l to the preference. A large advance was made by the Royal Bank to Bertram Gardner & Co. at a time when they were exerting themselves to avert the bankruptcy which af- terwards overtook them. This advance was made at ten o'clock in the morning. In the course of the forenoon, 8 The Tniftee for Stein's Creditors c. Sir Williaro Forbes i'< Co., Fac. CoU. Nc. 169. p. 343. 9 Edl, V. I p I'u. OF BILLS IN RELATION TO BANKRUPTCV. ^Yf* forenoon, the bank began to fear lor the credit of the house, and having insisted for security, Bertram Gard- ner & Co. deposited bills with thejn to a large amount. This was challenged upon the statute, as the constitution of a security for a prior debt. When the cause came into Court, it was the general opinion of the Judges, that the security was objectionable in so far as it applied to prior advances ; upon under- standing which, the Royal Bank at once renounced any claim upon these bills as security for the prior ad- vance, so that the question did not come to judg- ment. * As bills deposited in security within the sixty days may be redemanded by the bankrupt's creditors, so, there can be as little doubt, that bills indorsed or de- livered in payment of prior debts, wi|;hin that period, fall likewise under the statute. It has been well ob- served, that a debtor may gratify a favourite creditor, either by drawing a bill in his favour upon some of his dpbtors, or by indorsing to him a bill which standi in his person. But if the act do not strike at such deeds as these, it is plain that a trader has it in his power, upon the eve of bankruptcy, and within the sixty days, to distribute among his favourite creditors the whole of his circulating capital, except the goods R4. in ' July 1796, Hotchkis truftee for the Creditors of Bertram Gardrwr k Co. a. The Royal Bank ; Beli, i. 162. 280 OF BILLS IN RELATION TO BANKRUPTCr. in his warehouse ; nay, even these also may be thus disposed of, if he choose to sell them, and tike the bills for the price payable to the creditors. It were therefore a great imperfection if the statute did not include such deeds ; but the words are fully adequate to include them ; and the spirit of the act is strongly applicable. The act strikes against ' all dispositions, assignations, or other deeds, made and granted in fa- vour of creditors, either for satisfaction or further se- curity, in preference to the other creditors •, ' and an original draft in the creditor's favour, or an indorsa- tion to a draft in which the bankrupt is creditor, is strictly and properly an assignation for satisfaction or security, in preference to the other creditors. ' It was accordingly decided in a question that occurred in 1700, that a bill drawn in favour of a creditor within sixty days of the drawer's bankruptcy, was re- ducible on the act 1696. ^ In the case of Campbell a. Graham, already quoted, the question again occur- red. An indorsation by a debtor to his creditor within the sixty days, was challenged on the statute. The Court found, * that the act of parliament 1696 concerning bankrupts, takes place if the pursuer prove that the indorsation was for satisfaction or security of * Bell, V. I. p. 169. 2 Durward a. Wilfon, Didt. v. 1. p. 82. tTF felLt'S IN RELATION TO BANKRUPTCY. 281 of a prior debt, and not for present value received. ' * A similar judgment was pronounced in the year 1780. Fletcher indorsed two bills to Campbell & Mac Gib- bon who were his creditors. Another creditor, be- fore the expiry of the sixty days, rendered him bank- rupt, and brought an action of reduction of the in- dorsations against Campbell & MacGibbon the in- dorsees. The foregoing cases were founded on as de- cisive of the question. The Lord Ordinary found the bills subject to be reduced upon the act 1696, and the defenders liable to repeat the payment of them which they had received, for behoof of the pursuer and the whole creditors of Fletcher. ^ A distinction was hinted at on the bench, between the case of a credi- tor dwelling at a distance and one at hand receiving a payment. This distinction, however, has been since disapproved of i and in a case decided 20th May 1 794-, MacHutcheon a. Welsh, the Court held the rule to be general in ils application to all indorsations whatever. The case is not reported. ^ It must therefore be concluded, that drafts by a bankrupt upon his debtor in favour of a prior creditor, or * I7I3> Forbes's Decifions, p. 646. — Dalrymple, No. 97- p. 136. * Campbell a. MacGibbon, &c, Fac. Coll. Nc 1 25, p. 230. <> Bell, V. I. p. 171. 282 OF BILLS IN RELATION TO BANKRUPTCY. or indorsations to such creditor of accepted bills in the hands of the bankrupt, are, in the sense of the act of Parliament, assignations in security or pay- ment, in preference to other creditors, and so reducible, if within sixty days of the bankruptcy. But though bills indorsed in this way be reducible in the person of tlie creditor to whom they have been indorsed, arc they, or ought they to be so, in the hands of an oner- ous and bona fide holder, to whom they may have been afterwards transferred ? This question, which is not without difliculty, seems never to have cpme under the cognizance of the Court, To reduce an indorsed bill of this description, in the hands of a bona fide third party, into whose possession it had come for value, would certainly be inconsistent with the freedom and security of commercial dealings, and the acknowledg- ed privilege of bills, of being in the hands of onerous holders, exempt from any latent exceptions. And, at the same time, nothing would be more easy than for the creditor to indorse away for value the bills he had thus received from the bankrupt, which would be a means of defeating the very purpose and spirit of the act. Tlie creditors of the bankrupt might, no doubt, in all cases, have a claim against the original payeq or indorsee for repetition ; but, in the event of his failure, they would be deprived of this resource, fur- t]ier than ranking on his subject ; and the funds thus disposed of by way of preference being in the hands of OF BILLS IN RELATION TO BANKRUPTCY. 285 pf third parties, would be irretrievably lost to the estate. For this, however, there seems to be no re- medy ; for I should be inclined to hold (though cer- tainly with some diffidence), that a bill drawn or in- dorsed within the sixty days, is not reducible under tlie act in the person of an onerous and bona fide third party, * If » A good deal of argument might be ufed on both fides of this queftion. Upon the one hand, it might be faid, i. That as tbc words of the aft exprefsly declare all conveyances by the bankrupt, within the 6o days, in payment, &c. to be void and null, the radi- cal vitiation thereby created cannot be done away by any fubfequeot transference : what is void in its origin, cannot be rendered valid bf any thing done to it afterwards, a. That the general benefit to rc- fiilt from enforcing the ftatute, and preventing the undue alienatioa of the bankrupt's property to the prejudice of the body of his credi- tors, would greatly preponderate over the difadvantage to which it might occafionally expoie individuals ; and, at all events, a lon^ jiic indorfce is not without remedy, for he may fue the indprfcr froni whom he received the bill. But, on the other hand, in fupport of the opinion given in the text, may be urged, i. The irnpolicy of checking commercial confidence, and diminilking the free currency of bills fo neceflary in trade, a. The total impoffibility, in many cafe, of reducing documents of fuch rapid tranfmiflion as bills of exchange, in the hands of dirtant holders. 3. The peculiar hardlhip of making an innocent pcrfon, who muft always be fuppofcd to be unacquainted with the tranfaftions of anterior holders, futTer for the afts of another , And, 4. That the analogy, in the prefcnt ca/e, and that of bills for gaming debts, does not hold; for, in the orte, it is tiie accepter who challenges the bill as being given for an unLiwful confideration, which rendered it void ab initio as to him : in the other, the creditors of the drawer or indorfer muft attempt the reduction; and it > not very cafy to perceive how the accepter is to be (topped from making- payment to •he holder, or on vfhat principle the latter is afterwards to be made to refund to people he never heard of, the contents of a bill for which }ic had antecedently given full value t« a totally dirtinft perfcn. 2S4' OF BILLS IN RELATION TO BANKRUPTCY. If arj indorsation to a bill have been given, not in security or payment of a prior debt, but partly for money advanced between the date of the indorsation and the bankruptcy, it will be sustained to the extent of the sum advanced. The estate of Burnside was sequestrated on the 27. April 1793, and Ogilvie appointed trustee for the creditors. Burnside was, at this time, in an account- current with Robertson. 1792. Dr. T793. _ Cr, Dec.io.ToRobertfon'sac- Mar. 9. By Ar hihald ceptance without Muir's bill value - - L.40O indorfid to jyn^. R0t.ertfo11L.40o 15 3 Mar.'j4.Tocafli - - - ■260 Aprlllj. By cufti - - 197 I2 o Balar. e due to Rooert- foii - - 61 IS 9 L. 660 I..660 o o Ogilvie brought a reduction of the indorsation to Muir's bill on the act 1696. It was pleaded by Ro- bertson, Ij-/, That the act did not apply to the inaor- sation in question \ and, ^dly^ That at least he ought to be allowed retention to the extent of the 2601. af- terwards advanced by him. The plea, a& to the hrst point, was repelled -, but the compensation was sus- tained to the extent of 260/. " Though bills could not be drawn or indorsed in security or payment within die statutory period, it was * 1798, Robertfon a. Ogilvie, truftee for Burnfide'e Creditors, Fac. Coll. N^ 91. p. 210. OF BILLS IN RELATION TO BANKRUPTCY. 28^ was thought they might be granted as a mere voucher and acknowledgment of debt, which being simply an expeditious mode of constituting the creditor's claim without the expense of legal procedure, was not to be considered as a transference of, or bestowing any right over the funds in preference to other creditors. Accordingly, a person having granted a new bill for the amount of one that had been protested, including the interest and charges, it was sustained in a compe- tition with another creditor. ^ And, in another case, 3 person being debtor to his bankers in several bills which had been dishonoured, offered the bankers, in Security, a vendition to a ship, which, however, they refused. On this, he applied to a gentleman, who agreed to interpose his security, ^by joining him in a promissory note to tliem j and, in favour of this cau- tioner, he, on the same day, executed a vendition of the ship. "Within three weeks of the transaction he became bankrupt ; and an action having been brought by the trustee on his sequestrated estate, for setting aside the promissory note granted by the bankrupt, and indorsed by the cautioner, the Court found, that the promissory note did not fall under the statute. ' But ^ 1762, Cowan i7. Truftees of Mansfield, Diet. 3. 60. Fac. Coll. 74. 167. 4 1790, Sainton's Trurtce a. Sir Williim Forbes & Co. Fac. Coll No. ri6. p. 220. — Dobic, after inhibition had btcn executed againft him by Douglas Heron & Co., granted a bill to Brown, iiiXlead of oite 286 OF BILLS IN RELATION TO BANKRUPTCY." But by subsequent decisions on analogous points, the principle seems to be established, that a bankrupt cannot, in any respect, alter the situation of his cre- ditors ; that no deeds ought to be executed by him that may have that tendency ; and that it would be dangerous to support any deed of that nature. ^ All deeds that may be a cover to fraud are struck at by the statute 1696. Bonds of corroboration, bills as documents of existing debts, and deeds of a similar description, may be instruments of fraud, by enabling a creditor to accelerate his diligence, and get the start of others. The debtor may act fraudulently in re- fusing them to one while he grants them to another ; nay, from its mere secrecy, the acknowledgment of a debt may be fraudulent ; whereas a legal constitu- tion by action being public, would have given intima- tion to the other creditors to take similar steps. In short, the purpose of the act is to avoid and preclude all one of a date long prior to that diligence, and which he then retired. On this new bill, Brown led an adjudication againfl Dobie's cftatc; in the ranking of whofe creditors, Do-.igias Heron & Co. objcdied, that the bill in queHion having been atTeOed by their inhibition, the dili- gence which followed was void. To which it was anfwered, that the bill did not conftitute a new debt, being only a renewed document of an old one, agaiiift which the inhibition could not ftrike. The Lords repelled the objeftion. — 1785, Douglas Heron & Co. «. Brown. Fac. Coll. So. 123. p 349- ^ 1791, Creditors of MacKcllar a. MacMath, Fac. Coll. No. 170. p. 345. — »793» Creditors of Dunbar a- Grant, th'id. No. 6j. p. 13?. OF BILLS IN RELATION TO BANKRUPTCY. ^8V ail questions of actual fraud in such cases, by esta- blishing a rule, which, by its general application, may Stifle fraud. A bill or indorsation, to be liable to challenge, must be granted eitlier after the grantor's becoming bankrupt, or in the ' space of sixty days of before ; ' and as tlie acceptance of bills payable after date, and indorsations, are seldom dated, it might be some- times difficult to ascertain at what time the accept- ance or indorsation was made. To obviate which, the Court, as has been already observed, seems to have sanctioned the doctrine, that an acceptance or indorsation, * when not dated, is to be considered of the date of the bill ; and, if it be dated, is to be held as of that date, till the contrary be proved. * It was observed on the Bench, in the case of the Thistle Bank a. Leny, 1794, where a dated indorsation, of the handwriting of the indorsee, was objected to, that, by means of an indorsation, the act 1696 might be very easily evaded. But to this it was thought a sufficient answer,, that the danger struck equally both ways •, for if the consequence of repelling the objec- tion was to give an easy method of evading the act, the sustaining of it might throw loose transactions settled * Ch. 5. p. 135.— Ch. 9. p= 207. ' Kennedy a. Arbuthnot.— Roflle a. Ogilvie. — Smith a. Home. — Thifllc Bank a. Leny. 288 OF BILLS IN RELATION TO BANKRUPTCY. settled by indorsation, not only during the period of sixty days, but even for years preceding the bank- ruptcy. ^ In all cases, however, it is in the power of the creditors to do away the legal pre$umption of the acceptance or indorsement being of the date of the bill, by a contrary proof; and the examination of the bankrupt in sequestrations, together with the books of the parties, generally contributes to ascertain this point. As to the mode of computing the statutory period of sixty days, the rule appears to be this. The day or date of the bankruptcy is to be excluded, as descriptive of a period of time which is indivisible ; and the sixty days preceding are descriptive of an- other and prior period, which is to be reckoned back- wards, from the commencement of the day on which the bankruptcy happened. An indorsation or draft, therefore, executed on any part of the sixtieth day preceding the day or date of the bankruptcy, will fall under the act. Frauds, by which undue preferences may be cre- ated in contemplation of bankruptcy, if not expressly guarded against by the statute, or comprehended un- der its spirit, may be reduced at common law. Thus, Provan & Co, bought goods from Marshall to the va- lue of 236/. ; and when called upon for the price, or bills at six months, which they had engaged for, they defended 5 Ch. 5. p. 135. — Bell, I. 19Q. OF BILLS IN RELATION TO BANKRUPTCY. 289 defended themselves, by setting off bills of Marshall's, indorsed to them by Hamilton & Co.> to whom, in return, they had granted a biU for the amount of the indorsations. There was some doubt respecting the date of the sale. If posterior to the indorsation j therl as Provan & Co- would have been creditors to Mar- shall at the date of the sale, and as Marshall was made bankrupt within sixty day9, the sale would have been struck at as a security to Provan & Co. for a prior debt ; and of this all the judges were clear. But if, on the other hand, the indorsation Was posterior to the sale ; tlien, although the case fell not under the statute, it was exposed to challenge as a device to give security to Hamilton & Co. ; Provan & Co. get* ting right to their debt for the purpose of compensat- ing or setting off the debt due by tliem against it» The Court gave judgment for the price of the goods, refusing to admit the compensation or set off. " In connexion with the present subject, it may not be improper briefly to notice some of the other points in the general doctrine of bankruptcy, by which bills, in common with other funds, may be affected. The enactments against fraudulent alienation and unfair preferences, were made to prevent an undue distribu- tion by the bankrupt of his undoubted property j but S where " 1794, ^^lardiall's Truftee a. Provan ^ Co., Fac, C©U, N° 95". p. 212. 290 OF BILLS IN RELATION TO BANKRUPTCt. where the property is not indisputably vested in tn^ bankrupt, as in the case of an uncompleted sale ea bargain, and claims are advanced by third parties, questions of right will necessarily arise between them and the creditors ; for the adjustment of which, an-- other set of rules must be adopted. To the comple- tion of the sale of any property, and to vest a right in the purchaser as proprietor, tradition or delivery, ac- tual or constructive, is necessary. But after a sale of personal effects has been made, the seller may have good reason to become dubious of the buyer's cir- cumstances ; in which case, he is allowed to seize and reclaim his goods in the way to their destination, and before a legal delivery of them has taken place. This is called stoppage in transitu. Under similar circumstances, is it possible to stop the payment of bills ? A very usual way among merchants of set- tling for the price of goods, or satisfying a demand, is by a draft or order on a banker, or a bill drawn on a correspondent in favour of the creditor to whom payment is to be made. In such case, the acceptance of the order, as has been already remarked, is the com-# pletion of the transfer. Such draft or order, however, may frequently be given before the goods have been delivered to the drawer, or the equivalent and stipu- lated value received by him j and in the event of tlie failure of the person to whom the draft has been de- livered without having paid value, the question might occur-. OF biLls in relation to bankruptcy. 291 occur, whether, if the bill still remained in his hands, stoppage of payment might not be accomplished ? Or, to take another view of the subject, suppose that I have, for the accommodation of a person holding bills at long dates, given him a draft on my banker in London; that, immediately thereafter, the accepters of the long-dated bills fail, and involve in tkeir ruin the payee of my draft, may I not stop payment of my draft at the banker's, or countermand my order on my own correspondent ? Upon the same principle as that on which goods in transitu may be stopped by the sel- ler, it would be difficult to assign a sufficient reason why payment of a bill of this description might not be prevented ; for no third party being concerned, the privileges of bills are out of the question. And per- haps the same principle might apply to the indorsation of an accepted bill in the same circumstances, the in- dorsee failing without having paid value, and the bill continuing in his hands unindorsed. * Bills too, indorsed and remitted to a factor for a specific purpose, or deposited for a special appropria- tion with a banker, " are not, in the event of the fac- tor or banker's bankruptcy, to be confounded with his general property, which is to be divided among his creditors, but may be traced and redemanded by S 2 . the 5 Bell, V. 2. p. 142, 143. * Ibid. p. 201. 209. 292 OF BILLS IN RELATION TO BANKRUPTCY. the owner, provided they can be got at before they are transferred to third parties, and before the moiiey due upon them is received by the bankrupt, and blend- ed with his common funds, so as to be undistinguish- able from them. At least, this has been found in England, where cases of this nature are more fre- quent J and it is to be presumed, that our courts would determine on the same grounds. Jenner was employed as an agent or banker, by Zink, who drew bills on him under an agreement to make remittances to answer the same when due. Jenner sent (Nov. 1776) an account current including all the accepted bills running on him up to 30tli No- vember, amounting to 1,022/. and making the balance due to himself 1,137/. Zink sent first a bill for 150/., then one for 300/., and, on the same day on which they were sent, Jenner became bankrupt, without hav- ing paid any of the drafts, which Zink himself was obliged to retire. Zink owed Jenner on the bill ac- count, commission, &c. 195/.; and the bills for 450/. were, when they came to hand, deposited by Jenner's clerk, with Staples & Co., who wrote them short in Jenner's book. The plaintiff claimed his 450/. under deduction of the 195/. Sec; and the Court found him entitled to it. The bills were held to be merely de- posited with Staples & Co. and to be in Jenner's hands as factor till paid, in the nature of goods unsold. Zink versus Walker, 2 Blackst. 1154. Where OF BILLS IN RELATION TO BANKRUPTCY. COS Where the intercourse between a merchant and a banker resolves into a general account, so as to ren- der it impossible in their transactions to follow out any specific appropriation of bills deposited by tlie merchant, he must, in the event of the banker's fail- ing in his debt, rank as a common creditor on the estate. But if such specific appropriation can be clearly made out as to any part of the bills or funds in the banker's hands, it may be presumed, that the doctrine above adverted to relative to depositation for special purposes, will so far apply. There can be little doubt, that where the bills deposited are nego- tiated by the banker with third parties, the original owner can have no claim to recover against such third parties. And even where an express purpose of de- posite was evinced, bills were found not recoverable by the owners, though they had been only transmitted in ii general way to another house, the partners of which ■were also partners of the house of the depositaries. Bills were put into the hands of Liverpool bankers for the purpose of their providing for the payment of other bills due at a house in London. The Liverpool bankers sent the bills to the London house on the ge- neral account between the two houses. Both houses became bankrupt before the bills thus to be provided for fell due, and the depositor of the bills was obliged *to pay his original acceptances. He claimed delivery "f the deposited bills ; and as lie wouKl clearly have S f^ bcofia fide indorsees ; it is mani- fest, that these indorsees are entitled to rank and draw j»n inimediate dividend \ and if the whole notes have beeft 500 or BILLS IN RELATION TO BANERtJPTCT, been so used, (which is supposing an extreme case), 303. per pound, as above stated, may actually be drawn upon a debt that has only produced 20s. in the pound to the bankrupt estate. That there is considerable danger of double rank- ing in cross paper transactions, arising from undue re- tention or other inequalities, may be gathered from the following case. The Scotch house of MacAIpine & Co., and the English house of Livesay Hargrave & Co., agreed that an exchange of bills should be made between them, with the view of supporting each other's cre- dit. Accordingly MacAIpine & Co. received from the English house, bills to a large amount, drawn by them, and accepted by Gibson & Johnston j and gave in return their own acceptances and indorsed bills, many of which came into the hands of Gibson & Johnston. In this situation, the whole- parties became bankrupt. Bills accepted, drawn, or indors- ed by MacAIpine & Co. to the extent of about 25,000/., were at this time in the hands of Gibson & Johnston •, and the assignees of their estate, un- der a commission of bankruptcy, entered a claim for this sum upon the estate of MacAIpine & Co. To this claim it was objected, that bills accepted by Gib- son & Johnston, to the extent of about 22,000/., had been put into the hands of MacAIpine & Co., which they had indorsed, and which, net having been retired by OF BILLS IN RELATION TO BANKRUPTCY. 30i by the accepters, were now ranked on the estate of Mac Alpine & Co.-, and that therefore their amount fell to be retained and deducted from the claim of Gibson & Johnston, who could only rank for the balance, being about 3000/. The holders of the bills accepted by Gibson & Johnston, had also claimed on their estate, and had drawn a dividend of 5s. 8d, in the pound. The estate of MacAIpine & Co. had paid nothing ; but it was stated as pretty clear that it would yield 2s. 6d. per pound. The Court * found, that to the amount of the ac- ceptances due by Gibson & Johnston, the- plea of retention was well founded ; and that, till relief is given to that amount, the assignees under the com- mission of bankruptcy awardea against Gibson & Johnston, are not entitled to be ranked upon the se- questrated estate of MacAIpine & Co. ; and so far sustained the objection in question, ' This decision was altered on an appeal ; and the House of Lords * ordered and adjudged the cause to be remitted back to the Court of Session, to rank the appellants pur- suant to their claim, and to proceed further in the case, according to justice. ' ^ It was observed in this case, that if MacAIpine & Co. had still been possessed of the bills of Gib- son * i794> Curtis a. Chippendale, Fac. Coll. No. 140. p. 318. — Houfe of Lords, 23. February 1797. 302 OF BILLS IN RELATION TO BANKRUPTCY. son & Johnston, they would no doubt have been entitled to plead compensation against the claims But by indorsing them for value, they had transfer- red their right in them to the holders, who had ac- cordingly ranked for them on Gibson & Johnston's estate, and drawn a considerable dividend. If in this situation, MacAlpine & Co. were entitled to plead retention, it would produce the utmost inequality and embarrassment in the division of bankrupt estates. For as bills must necessarily pass through the hands of many indorsers, all of them, if they happened to be debtors to the accepter, would have a right of retention ; in which case, sums of money might be withheld from the estate of the accepters, to ten, twenty, or thirty times the amount of the bills due by them. Besides, as the holders of Gibson & Johnston's bills had drawn a dividend of 5s. 8d. in the pound from their estate, if the objection was to be sustained, a further dividend would virtually be paid on them, corresponding to the dividend which Gibson & Johnston would otherwise be entitled to draw from the estate of MacAlpine & Co. for the bills on which they claimed j and were this to turn out no more than 2s. 6d., still the bills of Gibson & Johnston, indorsed by MacAlpine & Co. would be drawing nearly a third more than their own debts, that is, Ss. 2d., and the others only 5s. 8d. And Of bills in relation to bankruptcy. 003 And it has been since remarked, that if the deci- sion of the Court of Session had been supported, it would have virtually been giving a sanction to double ranking on the personal estate for one debt. W i-n the Court of Session allowed the Scotch Company to retain against Gibson & Johnston the dividends due on their 6wn acceptances in Gibson & Johnston's Jhands, by indorsation from Livesay Hargrave & Co. ; this could be allowed only in security of an indemni- fication to the Scotch house for the claim already made against their funds by the holders of Gibson & Johnston's acceptances, which the Scotch house had indorsed ; for the Scotch house had no other claim against Gibson & Johnston. But the holders of these bills had not only claimed from the Scotch house but from Gibson & Johnston ; and therefore, the very debt had already been directly ranked on Gibson & Johnston's estate, which the Scotch house was now to rank for a second time on the dividends in their hands belonging to Gibson & Johnston, and forming a part of their personal estate. The House of Lords appears to have placed the matter oh its true footing : for, as, on the one hand, there was no room for the plea of retention ; so, on the other, there was no room for objecting that the sustaining of the claim of Gibson & Johnston would give a double ranking on the Scotch estate ; since the bills already ranked in recourse on the Scotch estate, were not the consideration which Gib- soa SOi OF BILLS IN RELATION TO BANKRUPTCY. son & Johnston had given for the billo on which they claimed, but these bills had come into their hands from a third parti/ ^ Livesay Hargrave & Co., in the course of trade with them. ' In a subsequent case, but under different circunv- stances, retention was also refused. Laidlaw accepted bills drawn by Forrester & Co., to the amount of 831/., and, on the other hand, they at the same time granted promissory notes to Laidlaw for about the same amount. Forrester & Co. In- dorsed Laidlaw's bills, and received their value ; but Laidlaw kept Forrester & Co.'s notes in his posses- sion, — and both failed. The holders of Laidlaw's bills drew 10s. in the pound from his estate. They also ranked for the amount on Forrester & Co.'s estate, from which it was supposed they would draw 5s. more. The trustee for Laidlaw's creditors having claimed to be ranked on Forrester & Co.'s estate for tlie promissory notes granted by them to Laidlaw, and still in his hands, the claim was objected to, on the footing that these promissory notes did not create a debt against Forrester & Co. distinct from that due by them in consequence of the accommodation bills which they received from Laidlaw and got discounted. These bills were the only value which they received for granting them-, and had Forrester & Co. paid them, Laidlaw ' Bell, V. 2. p. 421. OF BILLS IN RELATION TO BANKRUPTCY. 305 Laidlaw would have had no claim for the notes- These promissory notes, therefor^, were to be consi- dered in no other light than as a security put into Laidlaw's hands by Forrester & Co. in relief of the obligation which he had undertaken by accepting the accommodation bills. And as these bills were already ranked on Forrester & Co.'s estate, the trustee was entitled to plead compensation or retention against the claim made by LaidlaWs creditors ; for, to sustain the claim, would be to allow both the creditor and cautioner of the debtor to rank for the same debt. The Court repelled the objection, and allowed Laid- law's trustee to be ranked for the full sum in the bills. 3 On this judgment the following observations have been made. It is difficult not to acknowledge, I . That to allow Laidlaw's claim, without supporting the plea of retention, was just to allow a double ranking on T Forrester's 8 1796, Nairne a. Cranstoun, Fac. Coll. No. ar3. p. 502. As to ranking on bill tranraftions, fee alfo X790, Sandicman & Gra- ham's AfTijnees a. Stein, Bell's Dtcilions, p. 81. — In lliis cafe, thr. alTignees advanced a claim of retention over certain bills which had been indorfed and remitted by Steih, before his failure, to Saiidiertian & Graham, by whom they were difcoiinted, and placed to his credit, although they did not fall due till after feouenration was awarded againft him. The right of detention was refufed, as the bills were held as payments, of the date of the remittance, feeing that the in- dorfees had been thereby enabled \o vaife money on ihera. The adlgnecs were accordingly obliged, in ftatins their claim a^ainil ihr cftatC) to give credit for their amount. 306 OF BILLS IN RELATION TO BANKRUPTCY. Forrester's estate for the same debt, since the one set of bills had already ranked on that estate, and the other set of bills was in Laidlaw's hands merely as an indemnity. And, 2. That the only effect of such re- tention would have been nearly or precisely tlie same with what takes place in England, where the dividend for ranking on cross paper by a nominal creditor, though in reality only a surety, is suspended till it should be seen whit the surety actually pays, and how far he exonerates the estate from his own paper. It was urged, that the estate of Forrester & Co., who had discounted the bills, was benefited to the full amount of 20s. per pound by that discount, of which, the holders of these bills only got back from it 5s. in the pound ; so that, even after Laidlaw's creditors ranked upon Forrester's estate for the promissory notes and got other 5s., it would in fact be only 10s. in the pound ; whereas the holders of the bills ac- cepted by Laldlaw, having drawn 10s. in the pound of their amount from his estate, it is obvious, that his creditors would lose, at all events, a sum equal to 5s. in tlie pound on these bills ; and were the objection to be sustained, they would lose precisely the 1 Os. which had been paid them out of his estate. The conclu- sion deduced was, that even the refusal of retention left the estate of the discounter still highly benefited, while the holder of the cross paper was not reim- bursed. But is there not reason to question this- view ? OF BILLS IN RELATION TO BANKRUPTCY. 307 View ? It would indeed be quite correct, if both par- ties were solvent ; but in bankruptcy, it will be re- membered, that every personal creditor is to be held as having equally benefited the bankrupt's estate to the amount of 20s- per pound, while yet he has dra\\n no larger a dividend, and is in the very condition with the creditors in the discounted bills. But how should the mere circumstance of more than one party being engaged with the latter, give a double advantage, without transgressing the plain rule, that no one debt can rank more than once ? Another view that weigh- ed much with the Court was, that in such cases, the object should be, to preserve, if possible, equality be- tween the parties. This principle is entitled to everv regard between solvent parties to a contract ; but bankruptcy reduces all personal creditors to a level j and, laying aside all views of hardship, and all chance differences of the value of obligations, requires a couit of law to apply, without reluctance or exception, the same rules to all cases, viz. that no debt is to be ranked for, more than once ; and that no two parties are to be ranked at once for the same debt. It is no longer the one of the original parties that contends with the other, but the creditors of the one with the creditors of the other ; each being entitled to claim the whole personal funds of their debtor, and to ex- clude double ranking for the same sum. ^ T 2 This 9 Bell, V. 2. p. 422. f)08 OF BILLS IN RELATION TO BANKRUPTCT. This undoubtedly seems to be the just view of the doctrine on general principles. If Laidlaw's estate had paid dividends to the extent of 15s., and Forres- ter's estate to the extent of 5s. in the pound, to the holders of the bills, the debt would have been extin- guished : and Laidlaw's creditors might then have drawn from Forrester's estate a dividend correspond- ing to the amount of the 15s. in the pound so paid by them ; a sum for answering which contingency it was the duty of the trustee to have reserved from the funds. Were the principle of the decision universally acted upon, it might lead to considerable inequality in the distribution of bankrupt property. Had Laid- law's estate paid 5s. in the pound to the holders of the bills, and tlien ranked for the counter paper on For- rester's> which w^e will suppose to yield 15s. in the pound, the estate of Forrester, in that case, w^ould pay on the same debt, though constituted by different documents, 30s. in the pound. But there certainly is among all mercantil; people a received and inveterate notion, that an interchange of bills between two traders solvent at the time, cre- ates two distinct debts, which, in the event of failure, entitles the holder of the documents, whether the ori- ginal receiver, or a third party, to rank for the amount. They consider it much in the same light, as if an ex- change cf notes of the same value, though, perhaps, ot different currencies, had been made. The deteriora- tion OF BILLS IN RELATION TO BANKRUPTCY. 309 tion of the paper by the bankruptcy of cither of tlic parties, is one of the circumstances which they take into consideration, and docs not in any respect affect the original fairness of the transaction. Forrester's estate was unquestionably benefited by LaidlaM''s bills to the extent of 800/. ; while Laidlaw's estate, from a negligence perhaps on his part, in not discounting the counter bills, was not benefited a farthing by the trans^ action, but, on the contrary, was a loser of 400/. It would be hard to say that Laidlaw's creditors were not entitled to draw from Forrester's estate an indemnifi- cation for this loss, by ranking for those very bills, in consideration of which, other bills had been granted, that had enabled Forrester to add 800/. to his divisi- ble funds. The principle of suspending payment of dividends in England is nearly the same with that of withholding payment of dividends on contingent claims in this country. The claims, in this country, of which payment is suspended, are really contingent ; and it would be unjust to pay a dividend on a debt that might not eventually land on the claimant or the estate. But, in the above case, the debt was not wholly contingent. LaidlaM''s creditors had actually paid 10s. per pound on the accommodation paper grant- ed to Forrester, in relief of which, they claimed to be ranked for the amount of the counter bills ; and it was the opinion of the majority of the judges, that ^aidlaw's creditors ought to be allowed no more than T 3 what 310 OF DILLS IM RELATION TO BANKRUPTCY. what was sufficient to indemnify them. They were accordingly ordered to be ranked on Forrester's estate for that purpose 5 but, instead of being only permitted to draw a dividend on the Sum actually paid out by them, and payment of the remainder suspended till it should appear how much was drawn from the estate by the holders of Laidlaw's own acceptances, they were allowed to draw a dividend for the whole a- mount of the bills in their hands, while a similar di- vidend was paid to the holders of the bills discounted by Forrester ; which was, no doubt, authorising a double ranking for the same debt, unless it be held that the counter bills created a distinct debt. If the general rule, that no debt is to rank for more than it has produced to the estate, could be rigidly applied in all cases, every double ranking of this nature ought at once to be cut off. But it has been shown, that in some cases it is hardly possible, if not absolutely im- practicable, to do this ; and, at the same time, to pre- serve the privileges of bills as unexceptionable docu- ments of debt, in the hands of onerous and bona fide holders. And to make a partial application of the rule would scarcely answer the end proposed, in oppo- sition to those general principles of equity which might be judiciously applied to the adjustment of par- ticular cases, according to the peculiar circumstancci with which they arc attended. c :i .\ OF LETTERS or CREDIT. 15 i i CHAP. XIII. OF LETTERS OF CREDIT. JL/ETTERS of credit bear a close aflinity to bills of ex- change, and owe their origin to the same cause, viz. the difficulty and danger attending the transmission of cash to foreign parts, or to any considerable distance in the same country. A letter of credit, properly so called, is a mandate or order from a person in one place, to his banker or correspondent in another, au- thorizing him to' advance to a third person mentioned in the letter, sums of money to a specified or unlimit- ed extent ; for which advances, he who gives the let- ter becomes responsible. No person of ordinary pru- dence (unless he means to bestow the money by way T 4. nf Clii OF LETTERS OF CREDIT of gift), will grant a letter of this description, wichout being pretty well assured of reimbursement for the sums which he thus allows to be advanced on his cre- dit, especially as an unrestricted credit may, in many cases, be abused. To guard against accidents, such as the bearer losing the letter, or being robbed on the way, Savary recommends it as a necessary and pro- per precaution to describe minutely the person and appearance of him to whom the letter is given. But another species of letters of credit has grown into practice among merchants. A person, from being un- known in a particular place, or from his responsibility being doubted, may find it difficult to purchase goods upon his own credit ; in which case he gives a refer- ence to some house by which he is better known, or obtains from a friend a letter, certifying that he is in good circumstances and worthy of credit, and en- gaging to see paid the debts which he contracts. This, itrictly speaking, is more a letter of guarantee than a proper letter of credit j but the term is now indiscrir mlnately applied to both. In letters of credit, strictly so called, he who ?,dvanqes the money has a direct claim against ^he writer of the letter for the money so advanced. But in letters of guarantee for the price of goods furnished, the writer of the letter is only even- tually and subsidiarily liable, should the party to whom the goods are delivered be found unable tP pay the price.. OF LETTERS OF CREDIT. 313 price, which renders it necessary that he be discussed before any claim can be made against the guarantee. ' Letters of credit, like bills, being extremely use- ful in commerce, have been indulged with similar privileges. They are obligatory and probative against the grantor without witnesses, and whether holograph or not ; as are all missive letters in re mercatoria. * In the first cases that occurred in this country, re- lative to proper letters of credit, it was thought, that, in order to make merchants liable for their letters, re- gular notification of the advance was necessary, in the I Bouclier dcfcribes anotber fort of letters of credit, which he calls commercial mandates. A commercial mandate is a letter by which a mercantile houfe orders another houie in the fame city to pay, within a limited time, to the bearer, a certain fum fpecified in the letter. Thefe commercial mandates feem to be fynonymous with our inland drafts or orders, differing fomewhat in their form, but regulated fiearly by the fame laws. They are ftrongly praifed and recommended by Boucher, as by their means a creditor, fufpicious of his debtor's cir- cumflances, derives, from his acceptance of the order, a fecurity which lie could not directly demand, without doing fome injury to the debt- or's credit : And a debtor, who withes to protraft or evade payment, is thus brought at once to the tefl, without any apparent feverity on the part of the creditor ; for the debtor connot refufe acceptance, without expofmg himfelf to judicial diligence, which might othervvifc have appeared harfli on the part of the creditor, but is now the juft punifhment of difhonouring his order. N. tJJI- — VidcCh. 4. p. 124. ' ^739' Goodlet Campbell a. Lennox, — 1779, Clark g. Rofs, Did. V. 4, 412. — See alfo, 1752, Campbell «, MacLauclilan, Kilker. (Procf) N° 16. p. 448. SI 4- OF LETTERS OF CREDIT. the same manner as in the negotiation of a bill ; i for which three reasons were assigned. 1st, That the writer of the letter might know that credit was given ; 2ii/j/, That he might know how much was given ; and, 3(1///, That he might know whether or not the holder of the letter had repaid it. But it is now well ascertained, that the writer of the letter is liable for the advance, without any such notification. Weir gave Johnston a letter of credit upon Mans- field, of the following tenor. * According to our communing Saturday last, with respect to George Johnston, you will be pleased to give him credit for 150/., and I promise to see you paid.' Mansfield, accordingly, gave Johnston letters to his correspond- ents in England, to let him have what goods he want- ed to that extent ; with which credit, having gone immediately to England, he, upon his return, set up a shop, which he kept for about two years, and then stopped and absconded. JMansfield brought an action against Weir for payment, and proved the credit given, by the bills drawn by his correspondents ia England, partly on himself, partly on Johnston, which he paid and retired, and by the invoices accompany- ing these drafts. Weir pleaded, in defence, that no notification of the credit having been given, was made ^ l6Sl, Ewing a. Burnet; and, 1731, Earl of Dun- donald a. Watfon, Did. r. 547. OF LETTERS OF CREDIT. 31.t made to him prior to the raising of the action. Th^' Lords, however, repelled the defence, and found him liable. " A similar determination was given in the ca:e i t Hamilton a. Carlisle & Dunlop, in 176G. In 1762, Douglas of Glasgow, wrote to Hamilton of London, that he wanted to raise 500/. by drawing bills on London at long dates, and remitting bills at short dates to replace them, and asked leave to draw on him for that purpose, promising to get tlie se- curity of J. Carlisle and J. Dunlop, with v/hom he was engaged in a copartnery trade. The proposal be- ing agreed to, a letter was subscribed by Carlisle S: Co. referring to Douglas's iQtter, and engaging their secu- rity for such sums as Douglas should draw for. In January 1763, Hamilton, who had hitherto traded by himself, assumed a partner into his hoirse, but conti- nued to answer the bills drawn by Douglas as he had done before, till August 1763, when he was in ad- vance about 608/. Carlisle & Co. stopped payment in November 1763, and Douglas accepted bills for the balance due ; but lie having also failed, Hamilton brought an action against J. Carlisle and J. Dunlop the guarantees, who objected that they were not liable for the bills drawn by Douglas, in respect they v/erc not intimated to them. Atui admitting that it w.i.-i r- "• 1749, Mansfield a. Weir, Kilker. N" r r 337. 316 OF LETTERS OF CREDIT. not necessary to intimate every individual draft, yet intimation ought to have been made when any mate- rial circumstance occurred, such as might have led them to withdraw their security, or warned them to look for relief. Two periods were pointed out j the one when Hamilton assumed a partner in January, — the other when his dealings with Douglas came to an end in August 1763. To which it was answered, that the pursuer could be bound no further than to comply with the conditions of the mandate. But the letter contained no clause requiring intimation of the advances, of which the defenders, the partners of Dou- glas, could not be ignorant. And there was no reason for a particular intimation upon the pursuer's assum- ing a partner, which made no alteration upon the credit. The Court found the letter of credit extend- ed to the sum of 500/., and that the Company was liable to that extent. ' The terms of a letter of credit must be strictly complied with by him to whom it is addressed, other- wise the grantor is freed from his obligation. An order having been given by Rattray to Paisley, to furnish C. & J. Nisbets with sugars, to the extent of 10/. on their joint bill, at such date as might be. agreed upon, which, if not retired, he would see paid, ' Fac. Coll. N° 33. p. 255. — Sec alfo Stewart a. Drew, 17. February 1779. OF LETTERS OF CREDIT. 317 paid, the sugars were furnished by Paisley •, but no bill was taken by him from the Nisbets for the amount. J. Nisbet went soon after to settle in London, and C. Nisbet became bankrupt -, upon which Paisley pur- sued Rattray and the Nisbets for payment of a ba- lance still due of the price of the sugars. Rattray stated, in defence, that Paisley the pursuer had de- viated from the terms of the mandate, by not taking a bill from Nisbets for the amount of the goods fur- nished, which was sufBcient to bar the action of re- course. Rattray was not obliged to show that he suffered a loss by this deviation from the mandate. In order to found the mandatary In any action against the mandant, he must implement the terms of the mandate specifically. Paisley was not at liberty to substitute an open account in place of the bill, even though it had been equally beneficial to the mandant. But an open account is not held as equivalent to a bill ; and it would be a dangerous precedent in mer- cantile transactions, if letters of credit were to be so interpreted. A bill affords a more easy and expedi- tious method of obtaining payment -, and therefore, it is a deviation to the prejudice of the writer of the letter, if it is neglected to be got when stipulated. And so the Court found. ' A ' 1779, Paifley a. Rattray, Fac. Coll. N^ 51. p. 91- An order taken by a travelling agent or rider, is binding upon his conflituents. A merchant having given to the tidcr of an Englifh ' hcHifo 318 OF LETTERS OF CREDIT. A letter of credit may be constituted, so as -to make tlie writer liable, though it do not expressly bear that he interposes his security, or meant to come under any direct engagement, if it be such as to in- duce the person to whom it is addressed to give ere- dit, when he otherwise might not. Brown sent Crichton Strachan Bell & Co. an or- der for a quantity of sugar, to which Jack, who had formerly been in the practice of dealing with them, subjoined the following notCj addressed to Crichton & Co. ' 15th February, 1796. Gentlemen, — My friend, Mr Brown, is a young man merely begun bu- siness. You may safely send him the above order. In doing which, you will very much oblige your, &c. . (Signed) Wm. Jack. ' Crichton & Co. accordingly, on the 16th Febru- ary, sent Brown a part of the sugar commissioned ; and in consequence of a new order, they sent him, on the 29th March, a small additional quantity. A- bout the middle of June thereafter. Brown became bankrupt, •s ' houfe an order for a certain quantity of tea, the hoiifc, on account of fome difficulty that had occurred in obtaining payment of a former debt from the merchant, refufed to execute the order. The perfon who had given it, brought an aftion of damages againft them. The Court were of opinion, that a rider or travelling agent, who receives an order, comes under an obligation for the merchant by whom he ii accredited ; and therefore found, that as the defenders had failed to deliver the tea purchafed by the purfuer, they were liable to him in damage-;. i?o3. Mi'rc a. Harris Tames Sz Co. Fac. Coll. No. Io8. OF LETTERS OF CREDIT'. , 319 bankrupt, and left the country ; on which Crlehton & Co. brought an action for the price of the sugar a- gainst him and also against Jack, who, they contend- ed, had become his cautioner, by the letter of credit which he added to the first order. In defence, Jack stated, that his uniform practice of dealing with the pursuers had been on two months credit ; and that Brown was solvent, not only on the 15th February 1796, tlie date of his letter, but for upwards of three months thereafter. He further pleaded, that tlie letter founded on is merely a declaration that Brown was solvent at its date ; and it was an esta- blished principle of the mercantile law, both in this country and England, that no action will lye on such letter, if the writer really believed the person recom- mended to be solvent, although in this he should be mistaken. But Brown was solvent both on the 15th February, and for a period after it, which exceeded the length of the credit usually given by the pursuers. So that, even if the letter were actionable, the delay- on their part, considering the unfavourable nature of a cautionary obligation, would have been a relevant defence against the action. The Lord Ordinary re- pelled the defences, aud found expenses due ; and a reclaiming petition against the judgment was refused without answers. ' In ' ^191 i Crichton oc Co. a. Jack, Fac Coll. N° 41. p-97. 320 OF LETTERS OF CREDIT; In delivering a letter of credit, care should be taken that it be explicitly worded, so as to exclude any latitude of interpretation, as to the sum to be advanced beyond what was intended ; or any optional power in the receiver to apply to different persons for the same sum ; for if each of these persons be applied to and furnish the money, the writer will be liable to both for the amount furnished. G. Home wrote a letter to his brother J. Home of London, * that he was content to advance him 30/. to supply his necessity, and had written to Edinburgh to send him credit for it ; but that if he thought it would be too long ere it came to his hand that way, he might show his letter to Mr Foulis, and give him a bill upon him for the 30/., which should be ho- noured, and so to get the money from him or Mr El- liot, and it would be punctually paid. ' J. Home, having taken up the 30/. from Mr Foulis, drew a bill upon his brother for it, which was paid 5 and some months after, drew another bill upon him for 13/., payable to Mr Elliot, who pursued G. Home for payment. G. Home contended, that he could not be liable for the 1 3/. because his letter was ful~ filled by paying to Mr Foulis the 30/. therein contain- ed, several months before his brother received the 13/. from Mr Elliot j and he could never be liable by his letter for twice payment of the same sum. In reply to which, it was stated, that the defender's let- ter OF LETTERS OF CREDIT. 321 ter to his brother being a letter of credit for taking up 30/. from Mr Foulis or Mr Elliot ; although he wot the sum from Mr Foulis, yet, having kept the let- ter, and showed it afterwards to Mr Elliot, the latter was in hona fide to advance money on it, not knowing that Foulis had already made payment. For the de- fender, after he repaid tlie 30/. to Mr Foulis, should have got up his letter ; and that being omitted, he ought to be liable for the 1 3/. And the Court ac- coriiingly found him liable. ' U APPEN- ' 1705, Elliot a. Home, Did. v. i. p. 546. — Forbes's Pec p. 38. APPENDIX, No. I. ADDITIONAL FORMS OF BILLS FOREIGN AND DOMESTIC. N= 1. Exch. for L. 615 : 1 : 9 Sterling, at 40 per cent. yamaica, 26th Aprit, i8g6. Ninety days after fight of this our fecond of exchange, (firft and third of the fame tenor and date not paid), pay to the order of Mr John Beveridge, fix hundred and fifteen pounds one (billing and nine- pence Sterling, value received, and place the fame, with or without further advice, to the account of Smith Johnston & Co. To Mejfrs Leitch 53* Gordon, I merchants, Cla/gov. J N°2. St Peterlurg, tht iZth Auguf, 1806. — R* 4COD, at 3l|d. Sterl. p. R, Three months after date, pay this oiu- firft of exchange (fecond not paid) to the order of Mr John Mackenzie, the fum of four thou- fend rubles, at thirty-one and one eighth pence Sterling per rublc\ value in account, as per advice from 7o Mejfrs H'. \S' S. Scott, '\ Wm. Grierson & Co. ritrchants, Chfgo-w. \ VV. & S. Scott. Pa) able at our counting hqjifc. This bill is due on the 9-iJth December. 32i APPENDIX, N^ I. N° 3. Exch. for L. 300 Ster, at li^ florins p. pound. London, llth M^rch, 1807. At two and one half ufances, pay this my fecond of exchange ffiift not paid) to Mr Edward Hope, or order, the fum of three hundred pounds Sterling, at eleven and one half florins p. pound, value in account as advifed. JOUN TOMLINSON. To Mijfrs Ermauthal t^ Co.'] Rotterdjun. J Exch. p. L. 2500 Sterling. Bt Cbrljlophers, Jlth Novemhtr, 1806. Ninety days after fight of this our third of exchange, (firft and fecond of the I'aine tenor and date not paid), pay to the order of Mr James Swinton, two thoufand five hundred pounds S'ciling, value received in negroes for your eftate, and place it to account of Mir Timothy Barbour, as per advice. 7o Jacob Finlayfin Ej^.\ J HoDGSON, for Self & Glajgoiv. J re prochain, paycz par cette feconde de change, (la premiere ne I'etant), a I'ordre dc M" Gros Davillier & Co., cent, quatre vingt quinze llvres, dix fept fols, fix dcniers Sterling, valeur en compte, que vous paflerez, fuivant avis dc A M'3'^r: Mr: Is. Cazeivan \^ Co^ ^ g R0I.I.AND. Londrts. J DES ENDOSSEMENS. Payez a I'oidre dc Meflrs J. R. Defarts, valeur re^ue le 8 Juillct 1806. Grcs Davillier & Co. Payei a I'ofdre de Mons' B. L. Fould, valeur en compte. Taru^ 8 Juillet, 1806. J. R- DtsARTS. Pay to the order of Mr John Thorburn, value in account. B. L. Fould. A FRf.N-eH APPENDIX, N° t 327 A FRENCH BILL IN THE REVOLUTIONARY STYLE. BerJeaux It < ; ^ >Pour aoco ecus, a SS a. I 17 Dccemitc 1 803. J A deux ufancc, payez par cettc premiere dc change au Citoycn Durand dr cettc commune, ou ordre, deux mille egus a cinquantt' cinq denicrs de gros, valeur re9ue comptant du Citoyen Cordova, ct la paHerez, fuivant Tavis dc Votre afTcftionae ami, Aux Citoyens JViUtavts,frer(is,') BeaulieIT. negocians a Amjlerdim. / AN ITALIAN BILL. Vennia, It I3 Ntvembre, 180I. P'' L. 367 : I : 4 Stet. Ad u(b pagate p*^ qoeda feconda di cambio (una fol volta) al! erdinc S. P. delli Sig" Will"' Richardfon & Comp. la fomma di Lire trecento feffanta fette, foldo uno, & denari quatro SterS valuta in cCciX.0 e poneteli, come p. la d'avifo Addio. Gjovacchino Spadoni. Alii Slgri Todd ir PoppUA di Hutl. J Fagabilc in Londra. i A GERMAN BILL. Hamburg, deng SepUmber, 1806, fur L.a6o :o : O Sterling. Drey monath nach dato, bezahten fie gecen diefen fecunJa wech- iel (prima nicht) an die order der Herren Gebriider Bethmann zwey huodert und fcchfzig pfund Sterling den werth in rechniing und ftcUcrj iblgeo in rechnuDg laut bericht. Herren ") A. 15" D. Dablmund^ O. S. Kron'UKLM. in Lendsn. Uf 4 APP?N- 32S APPENDIX, N° iX. APPENDIX, No. II. DUTIES EXIGIBLE ON BILLS AND NOTES, COMMENCING ON THE 11. OCTOBER. 1804, BY ACT 4'4'. GEO. III. c. xcviii. § 2. & 8. Bill of exchange, draft, order, or promlfTory or other note, for the payment of money to t/je beanr on demand', where the fum (hall amount to 40s. and (hall not exceed 5I. 5s. - - L. O o S — of exchange, draft, order, or promifloryor other note, payable oiber-wife than to the bearer on demand, where the fiim fhall amount to 40s. and fhall not ^^c^eed 5I. 5s. - o I O — excetding 5I. 5s. and not erwceeding 30I. - - - - o i 6 — exceediR2 30I. and not exceeding jol. - ----020 — exceeding 50I. and not exceeding locl. -----030 — exceeding lool. and not exceeding 200I. ----040 — exceeding 200I. and not c\cee'Jing 500I. - - - - o 5 o — exceeding 500I. and not exceeding locol. - ---076 — where the fum fhall exceed icool. - -----OIOO Foreign bill of exchange which (hall be drawn in fcts ac- cording to the cuftom of merchants, where the fum exprcfTtd therein, or made payable thereby, (hall not exceed lOo!. — For each and every biil //; eacBfet - - O r O — above lool. and not exceeding acx)l. - - - --020 — above 200I. and not exceeding 500!. - - - --03 o — above 500I. and not exceeding loool. - ----040 — above icool. - - - - .-------o'50 Promldbry or other note, for the payment of money to the bearer on demand, (whidi may, within three years after the date thereof, but not at a later period, be rc- ifTued, from time to time, after payment at any place), where the fum cxprtfTcd therein, or made payable thereby, fhall not exceed ll. is. ------- o O 3 — exceeding ll. is. and not exceeding 2I. 2S. - - - o o 6 — exceeding 2i. 2s. and not exceeding 5I. js. - - - -00 p — exceeding jl. js. and not exceeding scl. - - - - o I o Promiflory APPENDiX, N° II. 32D Promiflciiy or other note, for the payment by, or on ac- count of, the Bank of Scotland, or the Royal Bank, of Scotland, or the Britilh Linen Company, to the bearer on demand, of the fum of lool., (which may, within three years after the date thereof, but not at a later period, be reiirucd, from time to time, after payment, at any place,) L. 050 Exemptions and Regulations. Drafts and orders for the payment of money to bearer on demand, upon any banker, or perfon or perfons a^iii^ as bankers, and rcfiding or tranfa^ling the bufinefs of a banker within ten miles of the place -A. which fuch draft or order (Tiall be drawn or given, and which pi^cc fluil be exprefled in or upon fuch draft or order. Bill, remittance bill, certificate, and ail other bills, of what na- ture or defcription foever, drawn by commiflioncd officers, maOcrs, or furgeons in the navy, for wages or pay, or by the commiflion«.rs of hii Majefly's navy, or by the commiflioners for viiftualling his Ma- jcHy's navy, or by the commiflioners fof taking care of fick and wounded feamen, or by the commiflioners for managing the tranfporc iervice, upon and payable liy the treafurer of his Majcfty's navy. The duty on bills, drafts, &c. is payable by the drawer. Any bill, &c. having a rtamp of a dijfereiit denomination, but of equal ot ftifieriar value to the llamp required, may, on the holder pro- ducing fuch bill, &c. is/ore the fame (hall become payable, be fl.iniped on payment of duty, and 40s. penalty; but if payable before proiiut- tion thereof, fljen on payment of duty, and lol. penalty. Unftamped bills or notes arc void, and thofe drawing or negotiat- ing fuch, or bills or notes improperly flampcd, are anfwcrablc for the duty. No nofe payable to bearer on demand for more than 20I., (except notes of the Bank, or Royal Ennk, of Scotl:ind, or the Britifh I. inert Company), (hall be rtiflucd, but flvdll be cancelk-d, on penally of zoL No note payable ro bearer on demand, which (hall ear date be- fore, or on loth October 1864, (hall be reifrucd after icth Oitt.bcf S8oj, but (hall be cancelled, on pcnaUy of aol. 330 APPENDIX, N** III. APPENDIX, No. III. I-ORM OF ACCEPTANCE SUPRA PROTEST BY A THIRD PARTY. At Glafgow, the day of cfghtccn hundred and feven. In prefence of me A. E. notary-public, refiding in Glafgow, by Royal authority duly admitted and fworn, and of the witnefles fubfcribing, Appeared C. D. merchant in Glafgow, along with J. K. the holder of an original bill of exchange, dated the fixth day of Fe- bruary laft, drawn by E. F. of the iflaad of Jamaica, upon G. H. merchant in Glafgow, whereby the faid E. F. ordered him, ninety days after fight, (feaind and third of the fame tenor and date unpaid), to pay to the faid J. K. or order, the fum of three hundred and fifty pounds Sterling. Which bill the faid J. K. exhibited, together with a proteft at his inftance againft the faid G. H. the drawee, for non- acceptance. And then and there the faid C. D. declared, that in orfler to prevent the return of the faid bill, and the charges which might thereby be occafioned, he would, and did accept of the fame for the honour of the faid E. F. the drawer ; and ProUjled that his faid ;.cceptance fliould no otherwife be conftrued ; and tliat he referred all jight of adion and relief competent to him againft the faid E. F. in confequence of his acceptance of the faid bill, as afcords with law, iVbertupon the faid CD. took inftrumcnts in my hands. Thus done ;ind protel^d, before and in prefence of M. N. and O. P. witneflcs to tlie premifcs fpecially called and required. When the bill is accepted by the dr;.wce in honour of the drawer, the quality of the acceptance may be fpecificd in the protert for non- acceptance : And when a bill is paid by a third party /^, to the holder, 182. Draivecy \vhen bound to accept, 124, ^ffcBs, want of, in the drawee's hands, 194. no e^icufe for negledl of negotiation when indorfers are concerned, 195. Erazure, See Vitiation. Exchange, definition of, 26. operations of bills of, ibid. nature of, 28, 30. cannot be charged for fuaimarily, 238. when due, ibid. Executor, taking bills in his own name, 294. Expenfes of pioteft, when exigible, ^9. jExtin(fiion of bills, in whole or partially, 160. J^aSior, bound by bills drawn in his own name, 6r. liable to his conflituent for bills taken in his own name, ibid. liable for money remitted by bill on a private, inftead of public bank, 62. liable for drafts in his own name, taken for amount of bills difcounted, ibid. JfiditioUf INDEX. 399 Fiditious indorfatiotty confidered as forgery, 148, 158. Fofeign bills y 35. Forgery of b'tllsy will not affeA the patties whofe names are forged, 157- Banking Companies may mark, and ftop forged note", 158. — note. Fraud, in procuring acceptance, 123. Furthcoming y aAion of, what, 228. G Gaming debts y bills given for, void, 92. even in the hands of an onerous indorfee, 138 Graccy days of, 38, 39, 41. ■ Gratuitous billty what, 96. H Holdery bound to drift negotiation, lo8, 151, 182- Horning. See Summary Diligence. Horfe-racing, bills given for money won at, 93. authorifed by ftatute in England, ib'td. I Indsr/alionsy full and blank, 131. danger of blank, 132. after proteft, ibid. who competent to execute, 133, 134 prefumed to be for value, 1 34. indorfer reinvefted by fcoring, 136* more privileged than bills, 135, •^.I. of an obligation contained in a bill, 142. may be reftrifted, 143. after a bill has been paid, or for iefs thiin the tuU fura, 1 44- when ficlitious, 148. of a bill payable to two perfons, 149. of a bill payable to a married woman, itfd. Indorfet- $4-0 INDEX. JndorfeCt onerous, not obliged to admit objeftions pleadabl* again ft the drawer, i 36. ©ath of, with regard to value given, mnft be fpecial, ihiJ. not entitled to payment from grantor of unlawful bills, 138. entitled to payment of a loft bill, though previoufly paid, 145. Initials^ bills figned with, 85. Inland bills, diftinguiflied from foreign, 44. employed to tranfaft the internal trade, 45. originally limited in their operation, ibtd. put on the fame footing with foreign bills, tbicf. peculiarity in Scotifhy 46. adopted to fiipply the place of promifTory notes, ihiJ^ Jnjlalments, promifTory note payable by, 52. Intirejl, claufe of, in a bill, does not vitiate it, 75. when due on bills, i\o. on notes payable on demand, 243. Intimation^ nature of, 208. if required on bills, ihiJ. — when neceflary, 209. of a bill pofterior in date, its efFedl, Hid. protefting a bill equivalent to, 211. verbal notice to drawee fufflcicnt, ibiJ. if necefTary, to be made by an indorfee, ilicl. divefts the drawer of the funds in the drawee's liands, 2 13. but not unlefs the holder limits his demand, 2 1 3. where efFefts, and not money, are in the drawee's hands, 214. neceflary in precepts for fungibles, 282. yus mariti, hufband liable for bills granted by his wife before marfi- ag^. 57- entitles him to purfuc for thofe granted to her, 58. bill to wife, bearing exclufion of, effeftual, ibid. INDEX. 3U Legacy, cannot be conftituted by bill, 96. may be efFedled by bill granted to an interpofed pei-fon, ibid. — 97. bill delivered to a third perfon for behoof of drawer, 97. Letter of advice, when necefTary, 100. Letters of credit, definition of, 311, and ufe, ibid. confounded with the letters of guarantee, 312. privileges of, 313. writers of, liable for the advance, without notification, 3 \.\» terms of, must be ftriftly complied with, 3 1 6. writer of, liable, though he does not exprefsly interpofe his fecurity, 318. ought to be explicitly worded, 320. Lofs, of a bill left for acceptance, 115. of an accepted bill, blank indorfed, 145, 148. Z,^ bill, payment of, 157. M Mark, bill figned with a, 85- Married after its diflblution, ibid. * Partners, when bound by afts of copartner, 6^, 65. Payee, of a bill, 35. Payment, of a bill, where to be demanded or made, 151, 159. at xvhat time, 152, 153, — to whom, 153. to a perfon not tbe real owner of the bill, i cj of a forged bill, 157. of a bill payable to two perfons, 158. not valid before bill be due, 159. muft be at the place of payment, ibid. by coflfignation, ibid. effeA of, 1 60. by accepting a compofition or fecurity, 1 6 1 . \>y draft on a banker, i6z. S44> INDEX. Payment, prefiimption of, 163, i6f. ' Jupra proteft, 166, 168. through miftake or ignorance, 170. Pet2alt)y bills contaiaing a, 76. Place, where a bill is drawn, when falfe, 106. Po'indttiiJy 246. Pojl, notification by, 108, 202. Prcfcriptwn, fexennial, of bills and notes, 2^9. runs, not from th> precife day of payment, but the la!| day of grace, 250. interrupted by fummary diligence, or an a£lion within the fix years, 25 1. not barred by an infom^al fummons, 252. barred by decree taken againil one co-obligant in a bill, ibid. and by produAion of bills and protefls in a procefs of ranking, ibui. whether interrupted by partial payments, ibiJ. 253. bills, how proved after, 254. if precluded by relative writings withm the fix years, 254, 256, 264. of bills payable at fight, 264. of the right of aftion of an accepter againft the drawer, ibid. of bills in England, France and Holland, ibid. — note, runs not againft minors, 265. no fummary diligence after, 266. payment of a bill to an onerous indorfee after, ibid. privileges, of bills, 205. bills complete without witneffes, and prove their own date, ibid. of bills payable to the drawer, and promiffory notes, 206, extraordinary, how long bills retain their, 230. Privi/egA, , INDEX; SiTi Privileges^ of promiflbry notes, 51. — See Arrejlment., Com- penfatiorif Intimation. Procuration, bills drawn and accepted by, 60. Promift^j of acceptance good in England^ 121. Promiffory notes., definition of, 49. utility ofj 50. poflefs equal privileges with bills, 51. — forms of, 52. Proofy of fraud againft the holder of a bill, when allowed, 123, — note. of an iridorfation fraudulently devifed, 137. Protejls, of bills, when neceffary, 171. cannot be difpenfed with, ibid. — their ufe, 172. vary in their forms, ibid. muft have bill prefixed, ibid, cannot be taken on the day of payment, 173. of unaccepted bills after the term of payment, ibid. of bills payable at a day certain, 1 74. by whom taken, ibid. of bills payable to the drawer, and promilFory notes, 1 75. fubfcription of witnefTes not neceffary to, 176. of bills payable at no certain place, 177. againft two perfons of the fame name, 178. of bills drawn upon account of a third perfon, ibid. of loft bills, ibid. for better fecurity, not praftifed in this country, 179. Q ^alitate ^a^ bill drawn in that form, N° 4. of Appendix, ii; Ranking of hills , how regulated in bankruptcies, 297* by the holder on the eftates of preceding parties, 298. by bankrupt fubje6ls of accommodation paper, &c. ibid, Y Ranl-in;; 34.6 INDEX. , Ranking of l/i//s, douhkf danger of, in crof j bill tranfa^lonB^ 299. double, from undue retention, 300, 305. how far poflible to prevent, 299, 308, 310. Receipt, on payment of a bill, 163. Re-exchange, definition of, and when due, 239. Reference, given for obtaining credit, 312. Regiftration, of bills and protclls, 245. Requ'ifites, of bills, 67. no precife fet of words neccflary to conilitute a bill ci note, 46, 72. but they mud be for money, 68. inuft be free from conditions and contingencies, 69. claufe of fubftitution, 71 — of intereft, 72 — penalty, 76. effeft of blank fpacesleft in drawing a bill, 77 — date, 79. bills without a time of payment, ibid. bill drawn without a payee, 80. drawer's fubfcription, 81, 84. figning with initials, and by notaries, 85. want of a fpecial addrefs, 99. Rider, or travelling agent, binds his conftituents by his or- ders, 3 1 7. — note. Robber, applying for payment of a bill, and perfopating tht in dor fee, 154. S. Security, proteft for further, 179 — arreflment in, 180. Sets, foreign bills of exchange drawn in, 43. Sight, bills payable at, 36, 119. Signature, of the drawer, 83. Smuggled Goods, bill granted fur, void, 94 — fuflained iu hands of payees, 140. Stamf), required in bills, 78. exceeding the appropriate one in value, ibid. Statutes, INDEXV fii7 Statutes^ 36. Will. III. § 6—45. 12. Geo. III. c. 72. $ 36.-23. Geo. III. c. 18. J 5»' 55— 249- 23. Geo. III.--44. Geo. III. c. 98 — p. 59. 25. Pari. 1696.— 81. 14. Pari. 1621. — 13. Geo. II. c. 19—93. 16. Car. II. c. 7. — 9. Annae, c. 14. — ibid. 92. 23. Geo. III. c. 49. § 4, 7. — 12. Geo. III. c. 72. § 43—163. 9. & 10. Will. III.— 3. & 4. Annae, 184, 242. 12. Geo. III. c. 72. ^ 41. — ibid. 188. — note. 1681, 20th Pari. Chas. II. 234. 1696, Co 36 — 236. 12. Geo. III. c. 72. § 42, 237.—$ 43, 244.—$ 40, 265. 21. James I. c. 16 — 264. — 5. Annse, c. 16 — 265. 1621, c. 18 — 268. 1696, c. 5 — 269. 33. Geo. III. c. 74. § 29—275- 19. Geo. II. c. 32. — I James I. 276. Suhjlitution, bill with a claufe of, void, 7 1 . Summary diligence, nature of, 233. conferred on foreign bills in the year 1681, 234. extended to inland bills in the year 1696, 236. how applied, and mode of its operation, ibid. competent againft the drawer and indorfers, in cafe of non-acceptance, ibid. made competent againil thefe parties after acceptance, in the year 1772, 237. only competent when regular negotiation has taken place, 238, 244. for principal fum and intereft, ibid. may proceed againft the drawer and all the indorfers at fhe fame time, 244. Summary S4-* INDEX. Summary diligeneet cannot proceed on a bill wanting the drawer's fubfcrinr- tion, 246. on a bill indorfed for value in account, ibid. not competent after the expiry of the fix months> tbiJ. Styhy old and new, 42. Sunday, bill due on, payable on Saturday, 41. Supra protejl. — See Acceptance, Payment, T. Tenor, of a loft bill, aftion for proving the, 245. Time, how computed on bills, 37. Trujlee, bills indorfed to, 141, 225. V. Value received, not neceffary to be exprefled in a bill> 85;, Value, given for a bill, muft be lawful, 88. when prefumed, '^l>id. 134. Vitiation, of bills, by altering the fum, I CO, by altering the date, 79. by crazing any of the words, 103. by extrinfic claufes, 71, 72, 76. U. Ufance, bills payable at, 36. V furious bills, void, 88. Ujury, in discounting bills, 90. W IVager, bill granted for the amount of a, void, 93, Witnejfesy not neceffary in bills, 205— or protefts, 178. FINIS. D. WiUison, i'rinter, Edinburgh. UC SOUTHtRN REGIONAL LIBRARY f ACILITV IIIIIIIIIIP'»I|I|I|III||IIII||II