Custom of trade.

Construed favourably

ILLUSTRATIONS.

1. Bill indorsed "Pay C.," omitting the words "or order." The Court of King's Bench having decided that such bills are still negotiable by indorsement, evidence that by custom they are not negotiable is inadmissible.'

2. If a foreign bill be dishonoured, the indorser is by the Law Merchant liable for the re-exchange. Evidence that by local custom the holder is entitled either to the re-exchange or to the amount he gave for the bill, at his option, is inadmissible.

3. Action by customer against banker for not honouring a cheque. The banker may show that the cheque was marked "post dated," and that it is the custom of bankers in the City of London not to honour cheques which are marked post dated.3

NOTE.-Goodwin v. Robarts (1875), is important as showing that the novelty of a general usage is no objection to its being incorporated into the Law Merchant, thereby to some extent overruling Crouch v. Crédit Foncier (1873), 8 L. R. Q. B. at 386. A particular or local usage must, it is conceived, be proved de novo each time. When both authority and custom are silent, foreign law is usually resorted to as a guide. See Introd., p. viii.

Art. 58. When the terms of a bill are ambiguous, the construction most favourable to the full validity of the instrument must be followed.5

ILLUSTRATIONS.

1. An acceptance will, if possible, be construed as absolute, not qualified, and a mere memorandum, inconsistent with such construction, is to be rejected as being no part of the acceptance."

2. The address to the drawee will be read in with the acceptance, ut res magis valeat."

3. Note in the form, "I promise not to pay." The word "not" will be rejected.

1 Edie v. East India Co. (1761), 2 Burr. 1216.

2 Suse v. Pompe (1860), 30 L. J. C. P. 75.

3 Emmanuel v. Robarts (1868), 9 B. & S. 121.

10 L. R. Ex. 337. Affirmed by House of Lords, 1 L. R. Ap. Ca. 47€.

5 Mare v. Charles (1856), 5 E. & B. at 981, Ld. Campbell.

6 Fanshawe v. Peat (1857), 26 L. J. Ex. 314; and cf. Stone v. Metcalfe

(1815), 4 Camp. 217; Fitch v. Jones (1855), 5 E. & B. at 246.

7 Mare v. Charles (1856), 5 E. & B. 978.

• Russel v. Langstaffe, cited Bayley on Bills, 6; and 2 Atkyns, 32.

4. Indorsement in the form, "Pay B., or order, value in account Construed favourably with X." This is not to be construed as restrictive.1

5. Holder may treat an ambiguous instrument either as a bill or as a note at option.2

6. Instrument invalid as a bill for not designating a drawee. If it be accepted, the holder may treat it as a note.3

Conflict of Laws.

requisites.

Art. 59. The validity of a bill as regards requi- Formal sites in form is (generally) determined by the law of the place of issue, and the formal validity of supervening contracts, such as acceptance or indorsement, is (generally) determined by the law of the place where such contract is made.*

ILLUSTRATIONS.

1. By German law a bill need not express the value received. By French law it must. A bill drawn in Germany on Paris, expressing no value, is (probably) valid everywhere.

2. By the law of Illinois a verbal acceptance is valid. By the law of Missouri an acceptance must be in writing. A bill drawn in Illinois on St. Louis, in Missouri, payable there, is verbally accepted in Illinois. The acceptance is valid everywhere.5

3. By French law a bill must not be drawn and payable in the same place. A bill, issued in France, is both drawn and payable in Calais. It is indorsed and sued on in England. It is (probably) invalid."

Exception. When a bill drawn and payable in one country is negotiated in another, it is sufficient

Murrow v. Stuart (1853), 8 Moore, P. C. at 276.

Edis v. Bury (1827), 6 B. & C. 433.

3 Fielder v. Marshall (1861), 30 L. J. C. P. 158; Cf. Arts. 37 and 274. Cf. Guepratte v. Young (1851), 4 De G. & S. 217; German Exchange Law Art. 85; Nouguier, § 1417-1427.

5 Scudder v. Union Bank (1875), 1 Otto, Sup. Ct. U.S. 406.

Cf. Bradlaugh v. De Rin (1868), 3 L. R. C. P. at 542; Bristow v. Sequerille (1850), 5 Exch. 275; sed contrà Wynne v. Jackson (1826), 2 Russ. 351 and 634.

Formal

requisites.

Interpretation.

if the negotiation be valid in point of form according to the law of the former.1

in

ILLUSTRATIONS.

1. An English note, payable to bearer, is negotiated by delivery

a country where this mode of transfer is not recognised. The title passes by such delivery.

2. Foreign bonds payable to bearer pass by delivery in England, though by English law such a bond would not be assignable.3

NOTE. The contract is made where delivery is effected, not where the signature is affixed. A few foreign writers, among them Savigny, are of opinion that the maxim locus regit actum is purely facultative, never disabling. German Exchange Law, Art. 85, has gone a long way towards adopting this view. How far does the nationality of the parties enter into the question? Suppose an Englishman abroad draws a bill payable in England, sufficient in form according to English law, but defective according to the law of the place where it is drawn. Would it not be valid in England? It would, it seems, be valid in Scotland. But if a bill bearing date from London was issued in France, it would probably be sufficient if it conformed to the formal requisites of English law. At present the law must be regarded as unsettled.

Art. 60. Except as hereinafter mentioned, the interpretation of the drawing, indorsement or acceptance of a bill is (generally) determined by the law of the place where such contract is made.

ILLUSTRATIONS.

1. Action in England on a bill drawn and payable in France and there indorsed in blank. The effect of such indorsement is determined by French law, i.e., it operates as a procuration."

2. A general acceptance given in Paris is (probably) to be interpreted according to French law.7

3. Note made and payable in Scotland, in the form, "Pay C.

1 Cf. Bradlaugh v. De Rin (1868), 3 L. R. C. R. at 542.

De la Chaumette v. Bank of England (1831), 2 B. & Ad. 385.

3 Cf. Crouch v. Crédit Foncier (1873), 8 L. R. Q. B. at 384.

4 Chapman v. Cottrel (1865), 34 L. J. Ex. 186.

5 Stewart v. Gelot (1871), 9 M. 1057.

Trimby v. Vignier (1834), 1 Bing. N. C. 151; Cf. Nouguier, §§ 747-760. 7 Cf. Don v. Lipmann (1837), 5 Cl. & F. at 12 and 13; Cf. Wilde v. Sheridan (1852), 21 L. J. Q. B. 263.

tation.

1007.," without adding the words "or order." By Scotch law Interpresuch a note is negotiable, though by English law it is not. C., in England, can negotiate it by indorsement.1

4. A bill drawn in Belgium on England is indorsed in France in blank. The indorsement is (perhaps) to be interpreted according to French law.2

Exception 1.-When an inland bill (Art. 24) is indorsed abroad, the indorsement is to be interpreted according to English law.3

Exception 2.-When a bill is drawn in one country and payable in another, expressions as to time and mode of payment are interpreted by the law of the place of payment.*

NOTE. In Bradlaugh v. De Rin (1870), 5 L. R. C. P. 473, the Exchequer Chamber held that in the court below, and also in Lebel v. Tucker, and Trimby v. Vignier, the French law had been mistaken, and that as regards the point raised-i.e., the right of an indorsee under a blank indorsement to sue in his own namethere was no conflict between the laws of France and England, but the principles laid down in those cases are not questioned.

Exception 3.-Where a Bill of Exchange is accepted in one country payable in another, the acceptance is (probably) to be interpreted according to the law of the place of payment.

1 Robertson v. Burdekin (1843), 1 Ross, Scotch L. C. 824.

2 Bradlaugh v. De Rin (1868), 3 L. R. C. P. 538, per Bovill, C. J., and Willes, J., contra M. Smith, J., and Everett v. Vendryes (1859), 19 New York R. 436.

3 Lebel v. Tucker (1867), 3 L. R. Q. B. 77.

4 Arts. 13 and 20. See, too, the duties of the holder: Arts. 180, 202.

3 Cf. Cooper v. Waldegrave (1840), 2 Beav. 282, measure of damages.

General

rule.

Clergy

man.

CHAPTER II.

CAPACITY AND AUTHORITY OF PARTIES TO A BILL.

Capacity.

Art. 61. Capacity to incur liability as a party to a bill is coextensive with capacity to trade and incur trade debts:

Capacity to indorse a bill for the purpose of authorizing the payment thereof, and transferring the property therein, is coextensive with capacity to sell or transfer personal property.

Explanation. The incapacity of one or more of the parties to a bill does not diminish the liability of the other parties thereto.'

NOTE.-Capacity must be distinguished from authority. Capacity means power to contract so as to bind oneself. Authority means power to contract on behalf of another so as to bind him. Capacity to contract is the creation of law. Authority is derived from the act of the parties themselves. Want of capacity is incurable. Want of authority may be cured by ratification. Capacity or no capacity is a question of law. Authority or no authority is usually a question of fact. Again, capacity to incur liability must be distinguished from capacity to transfer. An executed contract is often valid where an executory contract cannot be enforced: Cf. Arts. 111, 112.

Art. 62. A clergyman, though liable to penalties for trading, has full capacity to contract by bill.2

1 Grey v. Cooper (1782), 3 Dougl. 65; French Code, Art. 114; German Exchange Law, Art. 3.

2 Cf. 1 & 2 Viet. c. 106, §§ 29, 31.