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use by the Lombards and others, when banished for taking usury, in order the more easily to draw their effects out of one country into other countries selected by them for residence. The term "draft” is often applied to a bill of exchange. The person who writes the letter is called in law the drawer, the one to whom it is written, the drawee, and the person to whom it is payable, the payee.
Foreign and Inland Bills. These bills are either foreign or inland; foreign, when drawn by a merchant, residing abroad,
correspondent in England, or vice versa, and inland, when both the drawer and drawee reside in the kingdom.
Promissory Notes. Promissory notes, or notes of hand are a plain and direct engagement in writing to pay a sum specified, at the time therein limited, to a person therein named, or sometimes to his order, or often to the bearer at large. By statute of Anne, they are made assignable and endorsable.
Minimum Sum. By statute of George III, all promissory or other notes, bills of exchange, drafts and undertakings in writing, being negotiable or transferable, for the payment of less than twenty shillings, are declared null and void. It was made penal to utter them, as being prejudicial to trade and public credit. And notes, bills, drafts and undertakings under five pounds, are subjected to many regulations and formalities; the omission of which vacates the security, and is penal to him who utters it.
Negotiability. The payee, or person to whom or to whose order such bill of exchange or promissory note is payable, may by endorsement or writing his name in dorso, or on the back of it, assign to bearer, or to another person by name, who is then called the endorsee, and he may assign it to another, and so in infinitum. And a promissory note, payable to A or bearer, is negotiable without endorsement, and payment may be demanded by any holder of it.
Acceptance of a Bill of Exchange. But in the case of a bill of exchange, the payee or endorsee is to go to the drawee, and offer the bill for acceptance, which acceptance, so as to charge the drawer for costs, must be in writing, under or on the back of the bill. If the drawee accepts the bill, either verbally or in writing, he then makes himself liable for its payment, this being now a contract on his side, based on an acknowledgement, that the drawer has effects in his hands, or at least credit, sufficient to warrant the payment.
1 A bill drawn in one of the United States upon a person doing business in another state, is held to be a foreign bill of exchange.
By statute of George IV, the issuing of promissory notes for any sum under five pounds is prohibited, under a penalty of twenty pounds.
Protest for Non-acceptance. If the drawee refuse to accept the bill, the payee or endorsee may protest it for nonacceptance, which protest must be made in writing, under a copy of such bill of exchange, by some notary public. But if no such notary reside in the place, then by any other substantial inhabitant, in the presence of two credible witnesses, and due notice of such protest must be given to the drawer.
Protest for Non-payment. If such bill be accepted by the drawee, and he fails to pay it within three days after it falls due, which three days are called days of grace, the payee or endorsee should have it protested for non-payment, in the same manner, and by the same persons, who are to protest it in case of its non-acceptance, notifying the drawer of the protest.
Liability of the Drawer. The drawer on receipt of notice or production of protest, either of non-acceptance or non-payment, is bound to make good to the payee or endorsee, not only the amount of the bill, within a reasonable time after non-payment, without any protest, by rules of the common law, but also all interest and charges, computed from the time of the protest being made.
Timely Notice to Drawer. But if no protest be made or notified to the drawer, and any damage accrues by such neglect, it shall fall on the holder of the bill. The bill, when refused, must be demanded of the drawer, as soon as conveniently may be, for though when one draws a bill of exchange, he subjects himself to its payment, if the person on whom it is drawn refuses either to accept or pay, yet that it is with this limitation, that if the bill be not paid when due, the person to whom it is payable, shall within convenient time give the drawer notice thereof, for otherwise the law will imply it paid, for it would be prejudicial to commerce, if a bill might rise up against a drawer at any distance of time.
Liabillty of Endorser. If the bill be an endorsed one, and the endorsee cannot get the drawee to discharge it, he may call upon either the drawer or the endorser, or any subsequent endorser, for each endorser is a warrantor for the payment of the bill, which is frequently taken in payment as much upon the credit of the endorser, as upon that of the drawer. Such endorser has a right after payment, to call on previous endorsers on the bill, as well as the drawer, but the first endorser can demand payment from the drawer only.
Same Rules as to Notes. What has been said of bills of exchange is also applicable to promissory notes. These are endorsed and negotiated from hand to hand, only that in this case, as there is no drawee, there can be no protest for nonacceptance; or rather the law considers a promissory note in the light of a bill drawn by a man upon himself, and accepted at the time of drawing. And in case of non-payment by the drawer, the several endorsees of the promissory note have the same remedy as upon bills of exchange, against the prior endorsers.
CHAPTER XXXI.-TITLE BY BANKRUPTCY.1
Preamble. Having already referred to the transfer of the real estate of a bankrupt, we shall now treat of it as it principally relates to the disposition of chattels, in which the property of persons in trade more usually consists, rather than in lands or tenements.
1. Who may become a bankrupt.
4. Manner of transfer of goods by bankruptcy. I. WHO MAY BECOME A BANKRUPT.
Defined. A bankrupt is defined as “a trader” who secretes himself, or does certain other acts, tending to defraud his creditors. He was formerly considered in the light of a criminal or offender.
1 The word “ bankrupt” is derived from bancus or banque, which signifies the table or counter of a tradesman, and ruptus, broken, denoting thereby one wbose bench or shop is gone.
Humane Aspects of the Bankrupt Law. At present the laws of bankruptcy are calculated for the benefit of trade, and founded on the principles of humanity, as well as justice, and hence confer some privileges, not only on the creditors, but also on the bankrupt or debtor himself. On the creditors, by compelling the bankrupt to give up all his effects to their use, without any fraudulent concealment; on the debtor, by exempting him from the rigor of the general law, whereby his person could be confined, at the discretion of his creditor, though he have nothing to satisfy the debt. The law of bankrupts gives them the liberty of their persons, and some pecuniary emoluments, upon condition that they surrender up their entire estates to be divided among their creditors.
Rigors of the Roman Law. In this respect our legislature has imitated the example of the Roman law. Not the terrible law of the twelve tables, whereby the creditors might cut the debtor's body into pieces, and each take his proportionate share, de debitore in partes secando. Nor even the less inhuman laws, of imprisoning the debtor's person in chains, of subjecting him to stripes and hard labor, at the mercy of his rigid creditors, and sometimes selling him, with his wife and children, into perpetual foreign slavery trans Tiberim, an oppression which produced many popular insurrections, and secessions to the mons sacer.
Roman Law of Cession. We refer to the law of cession, introduced by the Christian emperors, whereby if a debtor ceded or yielded up all his property to his creditors, he was secured from being dragged to jail, inhumanum est spoliatum fortunis suis in solidum damnari. This was subsequently carried too far, by allowing a debtor to retain what little property he had, if he swore, that it was not sufficient to pay his debts; a law, which led to perjury, injustice and absurdity.
Traders Alone Included. The laws of England have steered between these extremes; providing against the inhumanity of the creditor, who may not confine an honest bankrupt after his effects are delivered up; and, at the same time, seeing that his just debts be paid, so far as his effects will extend. Yet, cautious of granting too great indulgence to debtors, they allow the benefit of the laws of bankruptcy to none but actual traders, since that class of men are, generally speaking, the only persons liable to accidental losses, and to an inability to pay their debts, without any fault of their own. If persons in other situations of life run into debt, they must take the consequences of their own indiscretion, even if they meet with sudden accidents, that may reduce their fortunes; for the law holds, that none but a trader should encumber himself with heavy debts. Trade cannot be carried on without mutual credit, and the contracting of debts is both justifiable and necessary. Later acts have extended the privileges of bankruptcy to many other classes.
Extended to Other Parties. Buying or selling only will not qualify a man to become a bankrupt, but it must both be buying and selling, out of which he gains a livelihood. And where persons buy goods, and make them up into saleable commodities, as is done by shoemakers and the like, though part of their gain is by bodily labor, and not by buying and selling, yet they are within the statute of bankrupts.
Infants and Feme Sole Traders. An infant, though a trader, cannot be made a bankrupt, for he can only owe for necessaries, and the statutes of bankruptcy create no new debts, but only give a speedier and more effectual remedy for recovering such as were before due. No person can be made a bankrupt for debts, which he is not liable at law to pay. But a feme-covert in London, being a sole trader, according to the custom, is liable to a commission of bankruptcy. II. ACTS CONSTITUTING BANKRUPTCY.
Watchfulness of the Law. The effort of a trader to avoid his creditors, or evade their just demands, is declared to be an act of bankruptcy, upon which a commission may be sued out. The law is extremely watchful to detect a man, whose circumstances are declining, that the creditors may receive as large a proportion of their debts as may be, and that a man may not go on wantonly wasting his substance, and then claim the benefit of the statutes, when he has nothing left to distribute.
Particular Acts of Bankruptcy. 1. Separating from the realm, with intent to defraud his creditors. 2. Departing from his house, with intent to secrete himself, and thus avoid creditors. 3. Keeping in his own house privately, so as not to be seen by his creditors, except for necessary cause. 4. Procuring himself to be arrested or imprisoned, without just cause ; this being an attempt to defraud creditors. 5. Procuring his money or goods to be attached or sequestered by legal process; when an attempt to defraud his creditors of their security. 6. Making