BILL OF EXCHAHOB. 



BILL OF EXCHANGE. 



id, may be always discounted. Accordingly, any man whoa* credit 

 ia good may at any time nia* money upon a bill drawn, accepted, or 

 iadorMd by himself. If hfe credit be doubtful be may still procure 

 nah by the BUD* expedient, paying, however, a premium or rate of 

 ilucount proportioned to the increased rUk. Among needy men 

 j nl ^ r -... , Qot unfrc]urnt of discomitM procured by these means 

 even at the exorbitant rate of 20 or 80, sometimes even 70 per cent. 

 But a still more common practice ia the negotiation of what are called 

 by the aigninoant name of aetommodation bill*. A trader unable to 

 meet hU liabilities appliei to a friend whose credit ia better than his 

 own, to accept, or in aoine other way to become a party to, a bill con- 

 cocted for the purpose, undertaking to provide the funds necessary for 

 paying it when due, and generally giving in return his own acceptance 

 of another concocted bill, known in the mercantile world as a cross 

 acceptance. When one or more name* have thus been obtained 

 .^H^ZZi to give currency to the bill, it is discounted, and the money 

 applied to the necessities of the trader. As this bill falls due. the 

 me operation ia repeated, until the system of expedients failing at 

 last, as sooner or later it inevitably must, the ruin of the insolvent 

 trader himself is consummated, and not .{infrequently draws along 

 with it others who, unfortunately or imprudently, may have become 

 parties to these unsubstantial representatives of value. Of the more 

 serious mischiefs of this dangerous practice, such as the temptation- to 

 forgery by the use of fictitious names as drawers or payees, it is perhaps 

 useleat to speak, because few men at first seriously contemplate the 

 eommiasiou of a crime, but are rather drawn into it by circumstances 

 not foreseen or not appreciated ; but the reflection that it is a foolish 

 and improvident practice that, in addition to the loss of credit, which, 

 once perceived (and how can it fail to be perceived I), it is sure to 

 occasion, there is the certain expense of stamps and higher rates of 

 discount, and moreover a double liability in respect of every shilling for 

 which CTOM acceptance! are given may perhaps have some effect in 

 deterring honest men, however necessitous, from having recourse to 

 this fatal expedient. 



The various uses to which bills of exchange are made applicable in 

 the great community of commerce having been thus explained, it 

 remains only to take a glance at their legal incidents as instruments of 

 contract. 



In contemplation of law a bill of exchange, as well in its original 

 formation as in its successive transfers, is an assignment of a debt, by 

 which the right of the original creditor to sue for and obtain payment 

 ia transferred to the holder for the time being. In such a substitution 

 the Roman law saw nothing objectionable; and in those countries, 

 therefore, which adopted the civil law for their own, the negotiation of 

 bills found no impediment. But into the common law of England had 

 early been incorporated a doctrine, founded probably on experience of 

 the mischief, that the assignment of a mere right such as a debt would 

 give, being in truth the assignment of suits at law, which might be 

 converted into an engine of oppression, was illegal and void. Bills of 

 exchange, coming within the meaning of this doctrine, must have been 

 extinguished by the courts of law. But, fortunately for England, the 

 opportunity seemed not to have arisen till the danger was past : for 

 although we have unequivocal mention of these instruments in our 

 statute book as early as A.D. 1379 (8 Ric. II. c. 8), no case upon them 

 before the courts is to be met with in the reports earlier than the time 

 of James I. In the 17th century merchants had acquired a prescrip- 

 tive right to the customs which they had been observing during the 

 long interval ; and these customs, including the use of negotiable bills 

 of exchange, and forming together the law-merchant of this country, 

 came to be received as parcel of the common law of the land. There 

 was still, however, a reluctance in the courts of law to admit that any 

 one but a merchant could be a party to these instruments, or that even 

 merchant* could make an inland bill in the absence of long precedent 

 mounting to prescriptive custom in its favour ; but the courts, after a 

 short resistance, were obliged to yield both points to the convenience 

 and necessities of modern society. 



In respect of their transferability, bills of exchange long stood alone 

 nmung contracts. By another property as remarkable, which they 

 derive also from the custom of merchants, they are still distinguished 

 from all other instruments, not under seal, known to the English law. 

 It is a presumption of law in their favour, that these instruments are 

 honest in their inception, and have been founded originally and trans- 

 tend since upon valuable consideration; so that whilst good con- 

 sideration must be proved by every one who seeks to enforce any 

 other contract not under seal, the holder of a bill of exchange is pre- 

 xumed to be a holder for value, until his opponent proves the contrary 

 or rebuts the presumption by such a prim4 facie case of fraud OH puts 

 the holder u|wn proof of his title to recover. 



Of the Portia to a Bill. Any person, whether trader or not, who is 

 not under a legal incapacity to contract, may become party to, one 

 thereby liable upon, a bill of exchange. Infants and married women are 

 not personally bound by becoming parties ; but the instrument, thon^l 

 inoperative as against them, may be available against others whose 

 names are upon it. A person may become party to a bill, not only by 

 his own act, but by that of his duly authorised agent. The agent 

 ought either to sign the name of his principal without anything 

 further, or to add to his own signature the words " per procuration for 

 A. B.," or to make it In some way apparent upon the face of the 



nstrument that he acts at **<. Otherwise, though really an agent, 

 he renders himself personally liable by his signature, and exempts his 

 principal Any one who assume* to draw, accept, or indorse by pro- 

 curation, knowing that he has no authority to do so, though without 

 any intention of committing a fraud, is, upon default by the person 

 whose authority is assumed, liable, though not upon the bill as a party, 

 yet to a special action for deceit at the suit of a bond JUe holder, 

 a breach of the implied warranty that he had authority as agent to 



ike the contract. 



Each member of a trading firm, in whose business bills are usual or 



eeasary, has an implied authority to bind his copartners by drawing, 

 accepting, or indorsing bills, provided such bills are not joint nnd 

 several : but this presumption of authority fails where the holder has 

 covinously colluded with a partner to make the partnership funds or 

 credit available for his own individual purposes. The acceptance of a 

 Bankrupt partner in the name of the firm, though after a secret act of 

 ixuikruptcy committed by that partner, is an available security in the 

 lands of a bonA Jide indorsee for value. 



Joint-stock companies under the 19 & 20 Viet. c. 47, may become 

 parties to a bill by any person, who has express or implied ami 

 if the company for that purpose, making, accepting, or indorsing such 

 bill in the name of the company ; but as the word " limited " is an 

 essential part of the name of a company formed with a limited liability . 

 any bill issued without that word is not binding on the company ; and 

 the person who signs or issues the bill in this imperfect state iii 

 [xmalty of 50/. and personal liability to the hulder on the bill. 



Qf the form and other requititet of a bill.\ bill of exchange must 

 be in writing, but no precise form of words is essential to its validity. 

 The only requisites ore that it be an order for the payment of money 

 simply, and not for the payment of money and the pert 

 some other act ; that it be for a sum of money certain ; that it be 

 payable at all events, and not upon a contingency, or out of a par- 

 ticular fund ; and that the person to whom, and the person by whom, 

 it is payable be ascertained absolutely on the face of the instrument 

 The forms in ordinary use are as follows : 



Form of a Foreign Sill in tett. 



No. London, lit Jan. 1859. 



[Stamp.] 



d:iys after sight (or days after date, or at 



usances) pay this my first of exchange, second and third of the same 

 tenor and date not paid, to Messrs. A. B. and Co., or order, ten 

 thousand francs value received of them, nnd place the sai 

 account. C. D. 



Mr. E. F., Parit. 



Form of an Inland Bill. 

 [Stamp.] 

 100. 



London, lit Jan. 1859. 



months after date (or " at sight," or days after date) 



pay Mr. A. B., or order, one hundred pounds for value received. 

 To Mr. E. F., CattU-ttreet, Liverpool. (.'. It. 



To take the several parts of this form in their order : 

 All inland bills, and such foreign bills as are drawn in England, are 

 liable to a duty, and must be made on paper duly stamped, u: 

 penalty of 6(V., with this further consequence, that the bill, though 

 otherwise complete, is absolutely worthless if not on stamped paper. 

 Foreign bills not drawn in England are of necessity excluded from tin- 

 operation of this statute. But another statute requires that all such 

 bills as have been, or purport to be, drawn abroad, shall be stamped 

 with the proper adhesive stamp (the same to be cancelled with the 

 name of the holder or his firm, and the day and year of his doing so,) 

 by the holder before he shall present them for payment, or indorse, 

 transfer, or otherwise negotiate them within the I'niU'd Kingdom, 

 subject to a penalty of SO/. And any person who takes such a bill 

 without the requisite stomp affixed and cancelled, shall not be entitled 

 to recover on it. or to make it available for any purpose whatsoever. 



For inland bills, and for foreign bills drawn in the United Kingdom, 

 and singly or otherwise than in a set of three or mure, the scale U as 

 follows : 



.</. 



5 . 

 Above 5 and not above 1 



2i . 

 50 



Not above 

 6 and not above 

 10 

 M 



so 



75 



100 



SOO 



SOO 



400 



00 



"JO 

 1000 

 1400 

 JOOO 

 SOOO 

 4000 and upward* 



100 

 200 

 800 

 400 

 500 



1000 

 1500 

 2000 

 8000 

 4000 



