tively recent origin. It is neither more nor less than the usage of merchants and traders in the different departments of trade, ratified by the decisions of Courts of law, which upon such usages being proved before them, have adopted them as settled law with a view to the interests of trade and the public convenience.

"By this process what before was usage only, unsanctioned by legal decision, has become engrafted upon or incorporated into the common law, and may thus be said to form a part of it.

"Usage adopted by the Courts having been thus the origin of the whole of the so-called Lex M. as to Negotiable Securities, what is there to prevent our acting on the principle acted on by our predecessors and followed in the precedents they have left us? Why is it to be said that a new usage which has sprung up under altered circumstances is to be less admissible than the usage of past times? Why is the door to be now shut to the admission and adoption of usage in a matter of altogether cognate character as though the law had been finally stereotyped and settled by some positive and peremptory enactment. I may just add in conclusion on this subject that Mr. Palmer, in his recent book on Companies, warmly champions the theory upheld in these last quoted cases-that the list of Negotiable Instruments, negotiable by virtue of the law merchant is not finally closed, and gives a list of important London banks and bankers who consider that Debentures to Bearer are negotiable by mercantile custom, and who act on that view in the ordinary course of business."

A Bill of Lading

Is supposed commonly to be "Negotiable "—but a transfer by endorsement carries with it all defects, and the holder would have to prove his title to the goods therein represented.

CHAPTER XX.

NEGOTIABLE INSTRUMENTS.

Question 1.-What do you understand by Negotiable Instruments? What are some of their advantages? Give examples.

A. Such Instruments representing on their face a certain sum of money as give the holder thereof a good title and the right to recover the amounts therein mentioned to be paid by the persons liable, and may be transferred by endorsement and delivery, or by delivery alone..

The question may well ask for only some of their advantages. The enormous growth in business in late years may safely be credited to "Negotiable Instruments." A merchant by their use is entitled to practically use Capital to extend his business in much the same proportion as the wealth of a country may be compared to its available gold currency (where used).

The most frequent examples in common use are where a man sells his goods on credit, and can convert this Debt immediately into its present value in Cash by taking from the Purchaser his promise to pay at a fixed date (known as a Promissory Note) the amount of the Debt, possibly with interest added, and discounting same, provided that the credit of the parties thereto is good.

A Bank Note or Bill is a Negotiable Instrument of such a recognized value or quality that it passes as readily as a gold coin, nay even more so in ordinary times, where it represents a large amount, as it is so much more convenient in every respect than a bag of gold coins or gold dollars.

In business transactions between parties at a distance the Cheque or Bank Draft affords a good example of the advantages

(216)

of negotiable paper in thus being able to remit in a letter the equivalent of Cash.

Question 2.-Can a Non-Negotiable Note be transferred to anyone? If so, how and what would be the effect of such transfer?

A. A Non-Transferable Note orCheque can be practically transferred to any one by an assignment or transfer, but the holder could not demand and enforce payment if the party liable could show that he did not owe the debt. In other words, the holder would hold it subject to all defects in title, etc.

Question 3.-What constitutes proper Presentation for Payment, of a Bill?

A.-Presenting it on its due date by the Holder, either personally or through an agent, at the place mentioned therein for payment, or where no place for payment is specified, on the Drawer or Maker himself, or at his place of residence, or last known place of residence.

If the Drawer or Maker could not be found after this reasonable search, Proper Presentment would have been duly made. This question is answered fully on page 231.

Question 4.-Black and Brown are Trading Partners and owe Smith $1,000. Black gives Smith a Promissory Note for the amount at four months, and by mistake Brown gives him a second Note for the same amount. Each was signed "Black & Brown." Smith has these Notes discounted at his Bank and before the due date fails badly, leaving no Assets. What is the Bank's position?

A.—The Bank can evidently get nothing from Smith, but it can duly recover both Notes from Black and Brown. The Bank is a Holder in due course for value.

It might, perhaps, be noted that Smith however could only have recovered payment of one of the Notes, as he improperly obtained both, and could under the circumstances detailed be held liable for obtaining money presumably under false pretenses.

Question 5.-(a) State what is meant by Endorsement.

(b) How does it affect the party Endorsing?

(c) In how many ways may Endorsing be done?

A.-Endorsement is the act of a person writing his name on a Bill when it is payable to him or his order for the purpose of negotiating it.

(b) It renders him liable for the amount of the Bill to any future holders, unless when he Negotiates it he qualifies his Endorsement by such words as "Sans Recours," or "Without Recourse." He could further endorse it as shown in the answer to (c).

(c) For full answer to this, see page 209.

Question 6. (a) What is meant by Protesting a Bill of Exchange?

(b) Who may Protest it?

(c) What are the essential features of a Protest?

A. For full answer to this question, see page 225.

Question 7.-Three months after date I promise to pay John Jones One hundred dollars. (sgd.) W. Smith.

Is this Note valid? If not, point out wherein it is defective.

A. The Note is valid, but not complete. It can however be legally rendered so by John Jones filling in the proper date, or of course Smith could do so.

Question 8.-Is Notice of Dishonor of a Bill or Note ever dispensed with? If so, when and how?

A.-Notice of Dishonor of a Bill is dispensed with when the Endorser waives Notice, that is, undertakes to be responsible whether he receives Notice of Dishonor or not.

Further, when the Maker has signed merely to accommodate the other party, he could still be entitled to be repaid, if a subsequent Holder had enforced payment from him (the Maker) and neglected to notify the party accommodated, viz., the first Endorser.

When, after the exercise of reasonable diligence, Notice as required by the Bills of Exchange Act, cannot be given to or does not reach the Drawer or Endorser sought to be charged.

As regards the Drawer in the following cases, namely, (1) Where the Drawer and Drawee are the same person; (2) Where the Drawee is a fictitious person, or a person not having capacity to contract; (3) Where the Drawer is the person to whom the Bill is presented for payment; (4) Where the Drawee or Acceptor is, as between himself and the Drawer, under no obligation to pay the Bill; (5) Where the Drawer has countermanded payment.

As regards the Endorser, in the following cases, namely (1) Where the Drawee is a fictitious person, or a person not having capacity to contract, and the Endorser was aware of the fact at the time he endorsed the Bill; (2) Where the endorser is the person to whom the Bill is presented for payment; (3) where the Bill was accepted or made for his accommodation.

Question 9.-"Three months after date I promise to pay A. "Brown, or order, One hundred dollars, with interest at 7 per cent. 66 per annum, value received. W. Bell."

(sgd.)

Brown being unable to collect the Note sues Bell on 31st Dec., 1898, for the face of the Note and interest. State how you would compute the claim, and your reasons.

A. This Note, like its valid predecessor in Question 7, is not dated, but presuming that it matured before the 31st December, the claim would be for the $100 and interest thereon computed from the date of Bill to 31st December at 7 per cent., though it is more than probable that Brown would only recover interest at the rate of 6 per cent. (rate regulated by the laws of particular country) from the due date of Bill to date of payment.