Story Case

Daniel Waymen delivered the following instrument to yincent Hudson:

"$50. January 1, 1915.

For brick, this day sold by Vincent Hudson, I promise to pay to his order, fifty dollars, on demand.

(Signed) Daniel Waymen."

Hudson indorsed the instrument by signing his name on the reverse side, and delivered it to Simon Dunham, who brought suit thereon in his own name. Can Dunham recover as on a negotiable instrument?

Ruling Court Case. Buller Vs. Crips, Volume 6 Modem Reports, English, Page 29

Crips had purchased wine from John Smith and, in payment therefor, had given a note in the following form:

"£100.

I promise to pay John Smith, or order, the sum of one hundred pounds, on account of wine bought from him. (Signed) Crips."

John Smith indorsed this to Buller, who brings this suit upon the note in his own name. He sued as if it had been a suit upon a bill of exchange. Crips contended that the action was improperly brought; that it was not a negotiable instrument, and only John Smith could sue on it.

Decision: When promissory notes first came before the English courts, the courts refused to attribute to them negotiability, although among the merchants, they had for many years passed as negotiable in the same manner as bills of exchange. There was no good reason for the refusal, except the hostility of the judge to the Law Merchant.

Holt, Chief Justice, said: "I remember when actions upon inland bills did first begin; and these originated as a particular custom between London and Bristol. And it was an action against an acceptor. The defendant 's counsel would put them to prove the custom; at which Hale, Chief Justice, who tried it, laughed, and said they had a hopeful case of it. And in my Lord North's time it was said that the custom in that case was part of the Common Law of England; and these actions since became frequent, as the trade of the nation did increase; and all the difference between foreign bills and inland bills is, that foreign bills must be protested before a public notary before the drawer can be charged, but inland bills need no protest; and the notes in question are only an invention of the goldsmiths in Lombard Street, who had a mind to make a law to burden all those that did deal with them."

Judgment was held in abeyance, while the court conferred with merchants. Lord Holt's attitude was dis-favorable. He maintained that the merchants under the domination of the goldsmiths in Lombard Street should not be permitted to make their own laws.

Ruling Law. Story Case Answer

No attempt will be made to trace the historical development of each negotiable instrument. It is sufficient to know that a foreign bill of exchange is the oldest form of negotiable instrument. Later, in 1696, inland bills of exchange were recognized. But promissory notes had been in common use as early as 1645. Prior to this time there were no banking institutions in England. Merchants, having large sums of money in their possession, would deposit them for safe keeping in the King's mint in the Tower of London. In 1640 King Charles I seized about 200,000 pounds without the consent of the merchants. Thereafter, they refused to trust their money to the King, and deposited it with the goldsmiths; the goldsmiths would issue promissory notes for the amount received. In 1702, for the first time, the question came before the court as to whether a promissory note was a negotiable instrument, according to the customs of the merchants. Lord Holt, a stubborn and conservative Common Law judge, refused to recognize its negotiability. Having taken this stand, Lord Holt persistently adhered to it in subsequent decisions, one of which was the Court Case of Buller vs. Crips, and, as a result, the merchants appealed to Parliament for a correction of these decisions. In 1704 the Statute of 3 and 4 Anne was passed which provided that promissory notes might be assigned or indorsed, and that actions might be brought upon them as inland bills of exchange. Since that time, this has also been the law of the land in America, as adopted by the colonies under English jurisdiction. All the laws of England of this period became a part of the Common Law of the colonies as a matter of course. This Statute of Anne is a part of the law of the States today.

The Story Case shows a good promissory note; title was passed to Dunham, who properly brought suit in his own name.