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A negotiable bill of exchange is a written order whereby A orders B to pay to C or his order, or to bearer, a sum of money, absolutely and at a certain time.



New YORK, January 5, 18 Value received, please pay to C

or order,

dollars, in

days (or months) after sight (it may be after date), on account of

(Signed) A To B

A is the drawer, B the drawee, and C the payee. If the bill is presented to B, and he agrees to obey the order, he “accepts” the bill, and this he does in a mercantile way, by writing the word " accepted” across the face of the bill, and also writing his name below this word; then the drawee becomes the acceptor. If C, the payee, chooses to transfer the paper and all his rights under it to some other



may do this by writing his name on (usually across the back; this is called indorsement, and then becomes an indorser. The person to whom C thus transfers the bill is an indorsee. The indorsee may again transfer the bill by writing his name below that of the former indorser, and the indorsee then becomes the second indorser; and this process may go on indefinitely. If the added names cover all the back of the note, a piece may be wafered on to receive more. In France, this added piece is called “ allonge," and this word is used in some of our law-books, but not by our merchants.



NEW YORK, January 5, 18 Value received, I promise to pay B

or order, dollars, in days (or months, or on demand) from date.


It is best to write the words from date," although they are often omitted, and the law construes the note as if they were written.

It is quite important to have a clear idea of the difference between the parties to a note and the parties to a bill of exchange If A makes a note to B, then A promises to pay, and is the promisor, and B is the promisee, or payee. But if it be payable to B or order, B may write his name across the back, that is, may indorse it, and is an indorser. And if he directs, over his signature on the back, that the note be paid to any person in particular, such payee is now an indorsee. But when a bill is drawn, nobody promises, in words, to pay it. A orders B to pay to C. If B, when requested, says he will not do as ordered, the law supposes A, the drawer, to have promised that he would pay if B did not. If B " accepts.” the law now supposes that B promises C to pay the bill to him. Now B, being the acceptor, is held by the law just as a maker of a note is, because he is supposed to have promised in the same way A, the drawer, is held just as the first indorser of a note is held, because he is supposed to have promised to pay if B did not. If the bill was negotiable, that is, payable to C, or his order, then C may indorse the bill; and although his name is the only one on the back of the bill, he is treated in law only as second indorser, because the drawer is bound in the same way as a first indorser. And if D then puts his name below C's, he is treated as third indorser, and so on. For the rights, obligations, and duties of all these parties, see the subsequent sections.

We repeat, that a negotiable promissory note is a written promise to pay to a certain person or his order, or to bearer, at a certain time, a certain sum of money; and he who signs this is called the maker or the promisor; the other party is the promisee or payee.


payee of such a note has the same power of indorsement as the payee of a bill of exchange. If the note be not payable “to order," nor to “bearer,” it is then not negotiable: these words, “or order” or “to bearer,” being the words which make it negotiable. The maker of a negotiable note holds, as has been said, the same position as the acceptor of a bill, the drawer the same as the first indorser of a note; that is, a party holding a note and seeking payment of it, looks first to the maker, and then to the indorser; one holding a bill looks first to the drawee or acceptor, and, on his failure, to the drawer.

Neither indorsement nor acceptance nor making is complete until delivery and reception of the bill or note or acceptance; and a defendant may show that there was no legal delivery of the paper.

The law of negotiable paper first defines a bill or note, and determines what instruments come under these names, and then describes and ascertains the duties and obligations of all the parties we have pamed above. We shall follow this order



A written order or promise may be perfectly valid as a written contract or promise, but, although made “to order,” will not be negotiable, unless certain requisites of the law-merchant are complied with.

The difference between a note that is negotiable and one that is not, is very important in many respects. One of these is as to the operation of the trustee process, or foreign attachment, or garnishee process, as it is sometimes called. If A owes B a hundred dollars, C, a creditor of B, may trustee A (to use the common phrase), and A must then pay to C what he owes to B. And this is so, even if A have given his note to B for the hundred dollars, if the note loe not negotiable, that is, not to B or order. But if the note le negotiable, A cannot be trusteed. The reason is, that if he is obliged to pay the money to C, and B should indorse the note 10 D for value, and D take it honestly, A must pay the note to D, and so would have to pay it twice. But if the note is not negotiable, B cannot indorse it, and A is safe in paying the money over to C.

1. The Promise must be absolute and definite. — The promise of the note, and the order of the bill, must be absolute. Words e.cpressive of intention only do not make a promissory note, and a mere request without an order does not make a bill of exchange. But no one word, and no set of words, are absolutely necessary; for if from all the language the distinct promise or positive ordur can be inferred, that is sufficient.

The time of payment is usually written in a bill or note; if not, it is payable on demand. The time of payment must not depend on a contingency. In fact, any contingency apparent on the face of the instrument prevents it from being a negotiable note; and the happening of the contingency does not cure it. And the payment promised or ordered must be of a definite sum of money.

A negotiable bill of exchange or promissory note must be payable in money only, and not in goods or merchandise, or property of any kind, or by the performance of any act. If payable in "current funds,” or “good bank-notes," or current bank-notes," this should not be sufficient on general principles, and according to many authorities; some courts, however, construe this as meaning notes convertible on demand into money, and therefore as the same thing as money, and call the note negotiable.

A bill or note may be written upon any paper or proper substitute for it, in any language, in ink or pencil. A name may be signed or indorsed by a mark; and, though usually written at the bottom, it may be sufficient if written in the body of the note; as, “I, A B, promise,” &c.; unless it can be shown that the note was incomplete, and was intended to be finished by signature. If not. dated, it will be considered as dated when it was made; but a written date is prima facie evidence (this means evidence which may he overcome by opposite and better evidence, but until so overcome is sufficient) of the time of making. The amount is usually written in figures at the corner or bottom. If the sum is written at length in the body, and also in figures at the corner, and they differ, the written words control the figures, and evidence is not admissible to show that the figures were right and the words inaccurate. But in an American case, a promissory note, expressed to be for “thee hundred dollars," and in figures in the margin, $300, was held to be a good note for three hundred dollars, if the maker when he signed it intended “ three” when he wrote “thee;" and whether such was his intention was a question for the jury. And the omission of such a word as “dollars,” or “pounds,” or “sterling," may be supplied, if the meaning of the instrument is quite clear.

It has been just said that any contingency apparent on the face of the instrument prevents it from being a negotiable note. Hence it is not safe to write in the body of the note, or in connection with the promise, any condition or contingency. But if what is so written in no way affects the promise itself, the note may still be negotiable.

Thus, in some parts of this country, persons who sell a machine, or other thing, on a credit, sometimes take a promissory note payable to the seller or order, and containing an additional clause, providing that, until the note is paid, the property in the thing sold (or the ownership of it) shall be and remain in the seller. Such notes are often made in the following form:


(Place and date) 18 On the

18 I (or we), the subscriber whose P. 0. is county of

and State of promise to pay

or order

dollars at the First National Bank in with interest at

per cent per annum until

day of


paid. And it is further agreed that the title to the (reaper), for which this note is given, shall remain in said (the seller) until this note is fully paid.

Value received (Witness.)


On the back of this note is sometimes the following statement :


acres of land in my own name in the town of county of and State of

which is worth, at a fair valuation, $ It is not incumbered by mortgage or otherwise, except the amount of

and the title is perfect in me in all respects. I have stock and personal property to the amount of $

over and above my debts and liabilities.

The above property being worth, over and above my debts, liabilities, and exemptions, at least FIVE TIMES the amount of the within note.

The question has arisen whether such a note is negotiable. Suppose the seller of the chattel, who is payee of the note, sells the note and indorses it for value to an innocent indorsee, and then the buyer finds that he was cheated, and puts in this defence of fraud when he is sued on the note by the indorser. He can make this defence if this note be not negotiable ; but he cannot make it if it be negotiable. I should say it was negotiable; and that the only effect of the condition or provision annexed to the promise was, that it operated much as a mortgage of the thing by the buyer back to the seller, to secure the payment.

2. The Payee must be designated. — The payee should be distinctly named, unless the bill or note be made payable to bearer. If it can be gathered from the instrument, by a reasonable or necessary construction, who is the payee, that is enough. The note may be made payable to the promisor or his order; that is, a man may say, I promise to pay to my own order; and such note is nothing until the promisor not only signs it, but indorses it.

A note indorsed in blank is always transferable by delivery, just as if it were made payable to bearer; because any holder may write over the indorsement an order to pay to himself. Indorsements are either indorsements in blank, by which is meant the name of the indorser and nothing more, or indorsements in full, which are so called when over the name of the indorser is written, “pay to A B.” (By A B we mean the name of the person to whom the note or bill is indorsed.) These two kinds of indorsements are fully explained subsequently in this chapter. A note to the order of

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