a creditor who, by his laches, discharges his debtor from liability on a bill given in conditional payment of a debt, forfeits also all right to the debt. Furthermore, suppose a check to be given in absolute payment of the drawer's debt, or in consideration of the payee's release of a claim against a third person. Surely, in either of these cases, the holder, who loses his right on the check, has lost everything.

The writer's criticisms upon the new code may be summed up as follows:

Section 3-2 is either useless or provocative of litigation. Section 36-2 might well be merged with section 36-3. Section 137 crystallizes an unscientific conception without any compensating advantage.

Section 29 is an erroneous definition. Section 34 is an inadequate definition. Sections 9-5 and 40 are repugnant. Section 68 introduces an unprecedented and arbitrary distinction. Section 70 would settle a conflict of decisions against the majority opinion, which is that of the chief commercial states. Section 175 copies the blunder of the English Act which codified an overruled decision.

Sections 9-3, 20, 37, 49, 64, 65–4; 66, 119–4, 120-3, 120-5, 120-6, and 186, taken with section 89, establish rules opposed alike to justice and to well-established law. Their enactment must inevitably be followed, sooner or later, by additional legislation to remedy the evils they would introduce.

The writer desires to repeat his opinion that the general adoption of the new code, properly amended, would be greatly to the advantage of the mercantile community. But unless the statements in the preceding two paragraphs can be disproved, the passage of the Act in its present form in a single additional state should be an impossibility.

JAMES BARR AMES.

THE NEGOTIABLE INSTRUMENTS LAW.1

A REJOINDER TO DEAN AMES.

BY LYMAN DENISON BREWSTER.

"THE best test of a good shield," says the proverb, "is a sharp lance." No keener weapon than that wielded by the accomplished Dean of the Harvard Law School could be turned against the Negotiable Instruments Law. The fact that in his two elaborate attacks on that code he has failed to disclose a single serious flaw is the most conclusive proof of its invulnerability. A word of recapitulation and introduction may be allowed before making a direct reply to his "One Word More" in the February number of the Harvard Law Review.

Of the twenty-three subsections of the law to which the critic objects, eleven are taken from the English Bills of Exchange Act,2 one follows the German code,3 one is taken from a New York statute, three are mere matters of form,5 and the objections to the remaining seven chiefly come, it would seem, from misinterpretations of the meaning of the law on the part of the critic.

The eleven subsections taken, most of them word for word, from the English Bills of Exchange Act, and all so identical therewith that the critic's objections apply to the acts equally, need no justification at this late date. They have been the satisfactory law of England and her colonies for twenty years. On them criticism is barred by the natural statute of limitations and the universal approval of the commercial world. One might as well criticise the Bill of Rights or the Lord Chancellor's wig. No text-book that I know of holds any doctrine contrary to the law of these eleven sections. Nor in fact has the Dean suggested any text-book which is in favor of any one of his twenty-three strictures. As to the practical working for twenty years of these eleven subsections, I beg to refer to the testimony of one of the committee who helped to draft the English Act.

1 Reprinted from 15 Harvard Law Review 26.

23-2 from 3-3 of English Act; 9-3 from 7-3, with an addition not in question; 9-5 from 8-3; 22 from 22-2; 29 from 28; 37-2 from 35-2; 49 from 31-4; 70 from 52; 175 from 65-5; 186 from 74, and 66 from 52-2.

Sec. 20, art. 95, German Exchange Law. 4 Sec. 137.

5 36-2, 36-3, 37.

In December last I wrote Mr. Arthur Cohen, Q. C., who was one of the committee who framed the English Act, stating the sections of the English Act which Dean Ames had criticised in his first article, and asked him if those sections had caused any difficulty in English practice. Unfortunately the copy of the American Act which I sent to him did not reach him, and he could only answer partially the points suggested. I wrote again, sending the two articles of the Dean, the answer, and the American Act, expecting to be able to publish his reply in this article. As it has failed to reach me at this writing,1 I can only give the substance of the letter received from him dated January 30, 1901. It was evidently not intended for publication as a whole, but I am permitted to make the following quotations:—

"No difficulties have arisen in England with reference to the suggested points, nor any litigation except as to the meaning of 'fictitious person.' The question came before the House of Lords in Vagliano v. Bank of England, 1891, Appeal Cases, 107.

"I think you are to be congratulated if your Act has not been and cannot be objected to for more formidable reasons."

In a letter received several years ago Mr. Cohen had written as follows:

"In my opinion the language of your bill is singularly felicitous. It is more clear, concise, less stiff and artificial than our Bills of Exchange Act, and in this respect one by no means unimportant your draft is an improvement on our Act."

Perhaps it ought to be added here that Judge Chalmers, the draftsman of the English Act, to whom a draft of the Negotiable Instruments Act was sent in 1896, after congratulating Mr. Crawford on the success of his work, recommended Mr. Cohen as one of the three best authorities in England on the law of bills and notes, the other two, I believe, being eminent London bankers, who had participated in the drafting of the English Act.

One word as to those eight sections which the Dean does not think it necessary to re-argue. As my answer to the criticisms on those eight sections, founded chiefly on their utility and convenience, does not seem convincing to the critic, I pause, deprecatingly, to suggest that the same eight sections are also well sustained by authority, as well as by reasons of- convenience.

1 For letter received after sending to press, see Appendix, infra, p. 92.

Let us see. Section 20, it is claimed, makes by implication an unauthorized agent liable personally on the note. In addition to the answer already given in the Yale Law Journal for January, 1901, i.e. "that the agent alone is in law, as in fact, the real maker of the note" in such cases, and might well be made directly liable, as he always is ultimately, it is proper to refer to the fact that the rule which the Dean claims is laid down in the Negotiable Instruments Law is adopted in the German Code, to which the Dean refers us as a model,1 and is declared in Byars v. Doores,2 as having "the weight of authority" decidedly in its favor at that time. Tiedeman (sec. 84) cites eleven cases so holding, to which we may add 147 Ill. 520; 104 Ind. 32. There are more cases one way and more states the other.

66

The Dean's criticism on sections 23-2-3 was that the word trustee" was more descriptive of the position of the indorsee in restrictive indorsement than the word "agent," and so but one word should be used. It is proper to say that the textwriters take exactly the opposite view,3 and so did Dean Ames when he published his Leading Cases. In his Index and Summary, p. 837, is the following section:

"The term restrictive indorsement' is commonly but loosely applied to two distinct kinds of orders, namely, to an order, whereby the holder indorses a bill to one person in trust for another, e.g. ' Pay A for account of B'; 'Pay A for the use of B'; and to an order whereby the holder simply deputes to an agent the business of collecting a bill, e.g. Pay to A for my use.' It was with reference to this "common," i.e. ordinary use of the word that the section in question was framed.

999

Mr. Tiffany, in the new Norton Hornbook on Bills and Notes, as usual hits the exact distinction tersely and clearly (p. 124) : ·

"The first and commonest variety, and the one which is generally spoken of by the text-writers as the restrictive indorsement, is that where the holder deputes to some other person the business of collecting the bill; the other where the holder indorses the instrument to one person for the use or benefit of, or as the trustee of another."

Regarding section 49, which treats of the right to have the transferrer indorse, which follows the English Act and does not

1 American Law Register, March, 1900, vol. 39, p. 145.

2 20 Mo. 284.

See especially Chalmers, 5th ed.; McLaren on Canadian Bills of Exchange Act, 214; Tiffany's Norton, 124. The italics are ours.

follow the Colorado Act, as the critic would have it, do, it may be pertinent to say that the annotator of the Colorado Act, Mr. J. Warner Mills (p. 23), says, speaking of the two forms of expression, "but either form of expression establishes the equitable rule of law." 1

Section 66 is substantially in the line of section 55 of the English Act, as already suggested.

Section 68, making joint indorsers liable severally, which the critic called "a blunder," and now calls "unprecedented" and "arbitrary," is in accord with the theory of the law already established in most of the states which adopt the reformed procedure, say three quarters of the states of the Union.2 "The liability of each indorser is several. So now by statute generally." 3

" 4

Section 137, making destruction of a bill acceptance, at first was objected to as "a perversion of language," "fantastic and inexplicable.' It is now described as "crystallizing an unscientific conception." Whether it is fantastic, or crystalline, or scientific, is not, perhaps, so very material. But instead of its being "a conception" of the draftsman or of the conference, the section was taken from the statutes of eight states, including the state of New York, from all of which the report was that " it had worked well." The bankers regarded it as a simple, practical, definite working rule, and none of the twelve commentators on the Negotiable Instruments Act have suggested the least objection to it.

Section 175. Payment for Honor. The Dean argued in the December number of the Review that because Mr. Chalmers adopted in the English Bills of Exchange Act the doctrine of an overruled case,5 the fact of its having been overruled must have been overlooked. By reference to note 3, page 237, of the fifth edition of Chalmers, he will see that the overruling case is duly cited as well as the continental codes. There was no "slip of memory" there. Daniel favors the overruled case."

6

1 See, also, Huffcutt, 26, to the same effect.

2 Connecticut Rules of Practice, p. 1, sec. 2; 2 Bliss, 53; Pomeroy, 2d ed., 326. 8 Norton, 159.

* See our answer to these adjectives and others, 10 Yale Law Journal, 88, January, 1901.

Ex parte Lambert, decided by Lord Erskine.

Ex parte Swan.

7 Daniel, sec. 1255; Norton, 301.