232. Waiver.-The necessity for demand, protest and notice may be waived by the drawer or endorser. This is usually done in writing on the paper itself. No set form is necessary, provided the intention be clear.

FORM OF WAIVER.

I hereby waive demand, protest and notice of non-payment.

J. A. Lyons.

This waiver can often be secured at the time the paper is bought, and it is a matter of prudence to secure it, especially when the parties reside at a distance.

Ceam

CHAPTER XXII.

QUASI NEGOTIABLE INSTRUMENTS.

233. Explanation.—Quasi negotiable instruments include all that class of written contracts, that, while not accorded the full privileges of negotiable paper, yet neverthless enjoy many of them. They occupy a kind of middle ground between negotiable paper and the ordinary contract.

BILLS OF LADING.

234. Definition.-A bill of lading is a written acknowledgment by the representative of a common carrier that he has received the goods therein described, to be carried and delivered upon the terms stated, to the person therein specified. It is both a receipt and a contract and in so far as it is a receipt it may like all receipts be explained or denied by parol evidence. This is so even when it has passed into the hands of a bona fide holder. In this respect it lacks much of

being a negotiable paper.

235. Explanation.-The idea of making bills of lading negotiable has evidently arisen from the use to which they are put. This may be well illustrated by the following:

Clark purchases a bill of goods from Evans in a distant city and orders them sent by a certain line of railway. Evans sends them as directed, getting a bill of lading which he sends to Clark by mail. Before the goods arrive Clark finds a customer for them. He makes

the best delivery of the goods possible under the circumstances by endorsing and delivering the bill of lading. From this it is but a step to the negotiable paper. The bill of lading when endorsed passes

the title to the property.

236. Effect on Stoppage in Transitu.-In the illustration used in sec. 235, if Clark bought the goods on credit and should become insolvent while they are en route, Evans would have the right to notify the carrier to withhold delivery from Clark. He could do this even if Clark had received a bill of lading but he could not do so if Clark had previously negotiated it to a bona fide holder for value. In this respect it resembles a negotiable instrument. (See sec. 306.)

237. How Used, etc.-A bill of lading for goods sent as per order and a draft for the purchase price may be sent together by the consignor to the consignee. In this case the draft must be honored or the goods cannot be retained, for the consignee gets no title to them. Or the consignor may ship the goods to his own order, draw a draft on the vendee for the price, pin the draft and bill of lading together and deliver them both to an endorsee, usually his bank, for value. This keeps the possession of the goods from the vendee until the draft is honored when the bill of lading will be properly endorsed and delivered to him, thus enabling him to secure the goods from the carrier. This is practically sending goods by freight C. O. D.

238. Who May Transfer, etc.-Only the consignee can pass legal title to the goods by an endorsement of the bill of lading. The consignor is not the proper person to endorse unless he also be consignee or it be made to his order.

239. How Endorsed, etc.-A bill of lading may be endorsed by any of the modes of endorsing negotiable paper. It may be endorsed with conditions and all subsequent endorsees take it subject to the conditions. Even the carrier must observe that the condition is performed.

Not being strictly negotiable instruments one who endorses them does not incur the liability of an endorser. 101 U. S. 557.

240. Title, etc.-Unlike negotiable paper no better title can be given the endorsee of a bill of lading than the endorser had. As a result of this if a bill endorsed in blank be lost or stolen or obtained

by fraud the thief or finder could not confer a good title upon even an innocent purchaser for value. 29 Minn. 95 U. S. 92, 51 Pacific Rep. 461.

WAREHOUSE RECEIPTS.

241. What Are.-When goods of any kind are delivered to a warehouseman for storage, a warehouse receipt is given. No set form is required, hence they vary in details yet the object is always the same. We shall learn in the subject of Bailments that the liability of a warehouseman is fixed by the common law independent of receipt. But the liability is now quite generally modified by statute. Like a bill of lading a warehouse receipt is both a receipt and a contract.

KLKVATOR.

Received in Store from

Twenty-seven and

if R

No. Two Rye,

-1894

Car 1468 B. & M. Five Hundred

Bushels

subject only to the order hereon

R. E. Seaver & Co.,~~~~~~~ and the surrender of this receipt and payment of charges.

This grain is subject to our advertised rates of storage.

It is hereby agreed by the holders of this receipt, that the grain herein mentioned may be stored
with other grain of the same quality by inspection: Loss by fire or heating at owner's risk

242. How Used, etc.-The instrument becomes of interest in a commercial sense in the same manner as a bill of lading by being the means of effecting a delivery of personal property not in the seller's possession. This is well illustrated by the grain business. In large cities, elevators are erected for the storing of grain for a fee. A carload is sent to a certain elevator by the commission merchant and a warehouse receipt is delivered for it. The grain is thrown in with other grain of its kind and quality and no pretense is made of re-delivering the identical grain. These receipts when sold are endorsed and delivered to the buyer. While an endorsement of this kind will give to the endorsee the right to claim the amount of goods represented in the receipt, yet independent of a statutory regulation, such an instrument is not fully negotiable.

LETTERS OF CREDIT.

243. Explanation.-A letter of credit is used when persons are traveling abroad in the following manner: A, the tourist, deposits with his home banker the amount of money which he thinks he may

First National Bank 4 Chicago

No. 1739.

·Chicago, May 16._1894

This letter must be returned with the last draft

Gentlemen

This letter will be presented to you by

Martin Beem,

in whose

favor we beg to open a credit with you collectively for the sum of

Five Hundred

Pounds Sterling,

to which extent be pleased to furnish payments in sums as required,
inscribing the amount so paid on the back of this letter. In
reimbursement you will take his draft on the City Bank
of London, inserting therein the date and number of this credit,
which we engage
shall meet with due honor

Your charges are to be paid by the bearer hereof
Requesting for him

honor to be

-your

best attention, we have the

Gentlemen,

500.

Your obedient servant,
L. J. Gage,

This Credit is in force until__ January 1st,

Fignature of

Cashier

1895.

Ineed while abroad. For this the banker gives him a letter of credit directed to his foreign bankers. Against this letter A may draw at such times and in such amounts as he may need, up to the amount of the letter, calling upon any foreign banker mentioned in the letter. Had his banker drawn on any one of the foreign bankers for the whole amount of the deposit this would have been a bill of exchange and of course fully negotiable. Although transferrable by endorsement they are usually treated by the courts the same as a non-negotiable contract.

COUPON BONDS.

244. History.-It has been said that the manifest disposition of the present age to swell the list of negotiable instruments cannot be better illustrated than by the history of coupon bonds. This was a kind of instrument but little known forty years ago but now they are much used by both corporations and individuals. It is now well settled that coupon bonds of a corporation if lawfully issued are commercial securities and so far negotiable that a bona fide holder purchasing them before maturity will take them free and clear of any defenses existing in the hands of the original holder. These instruments are nearly always payable "to bearer" and are passed by delivery. For this reason the law is not yet settled as to what extent the holder shall be protected who takes them as bearer, instead of as endorsee, and in this respect they cannot yet be said to be fully negotiable. The coupons are transferrable in the same manner as the bond itself, and are independent of it.

PRACTICAL REVIEW.

I. A gives his note to B payable in wheat. C innocently purchases the note from B for value before maturity, and in the usual course of business, but at maturity A refuses payment, claiming that the paper was secured without consideration. Can C collect it from A?

II. A secures B's note without consideration and endorses it before maturity, and for value to C, who has knowledge of the lack of consideration. Can C collect it from B?

III. In the above case, suppose C purchased the paper innocently, and then transferred it to D, who had knowledge of the lack of consideration between A and B. Could D collect it from B?

IV. What would be your answer to No. 3, provided the sale from C to D was after maturity?

V. A playfully writes his name on a blank paper and hands it to B. B fills out a promissory note above it and at once sells it to C, who is innocent of the transaction. Can C collect it from A?

VI. A owing B $100 writes and signs a promissory note for that amount,