city, and receive from him a bill of exchange on some banker in London. When A. arrives in London, he may present the bill of exchange to the banker upon whom it is drawn, and receive the ten thousand dollars, thereby avoiding the expense and risk of transmitting the gold and silver from New York to London.

2. Bills of exchange were in their origin payable, absolutely and unconditionally, in gold and silver, at the time specified therein. They were divided into two classes, foreign and inland. Foreign bills of exchange are those drawn by a person in one State or country upon a person in another State or country. Inland bills of exchange are those drawn by a person in one State or country upon another person in the same State or country.

2. The par of exchange is measured by the intrinsic value of the coin. The intrinsic value of the coin depends upon the amount of pure gold or silver and the amount of alloy in any given weight. The rate of exchange between two countries, is the actual price at which a bill drawn by a person in one State or country upon a person in another State or country can be bought. The rate of exchange is made to differ, first, by the difference of weight or fineness of the coin; second, by the increase or diminution of the demand for such bills of exchange.

4. The general theory upon which bills of exchange rest is 1. That the drawer has funds in the hands of the drawee; 2. That the drawer sells or assigns to the payee so much of these funds as is named in the bill; 3. That when the drawee accepts the bill of exchange, it is an appropriation of so much of those funds for the use of the

involved? When were they introduced into England? How may the advantage of bills of exchange be illustrated?

2. How were bills of exchange in their origin payable? Into what two classes were they divided? What are foreign bills of exchange? What are inland bills of exchange?

3. How is the par of exchange measured? Upon what does the intrinsic value of the coin depend? What is the rate of exchange between two countries? How is the rate of exchange made to differ?

4. What is the general theory upon which bills of exchange rest?

payee, or other person holding under the payce; 4. That this amount ceases henceforth to be the money of the drawer; 5. That it becomes the money of the payee, and those holding under him, in the hands of the acceptor. After such acceptance, the acceptor becomes the primary debtor of the payee, or other holder. The drawer and indorsers are only collaterally liable to the holder upon default of payment by the acceptor.

5. Bills of exchange in familiar language are known as orders. A. calls upon B. for the payment of a debt. B. has a claim for an equal amount against C. B. instead of paying the money to A., gives A. an order on C. for the amount of his claim. This order is a bill of exchange. B. is the drawer. C. is the drawee, and A. is the payee. When A. presents the order to C., and C. accepts it, C. is called the acceptor. If A. write his name upon the back of the order, he becomes an indorser. The law by which bills of exchange are governed is known as the Law Merchant, or mercantile law. It is a system of customs acknowledged by all commercial nations. Blackstone calls it the custom of merchants, and ranks it under the head of particular customs, which comprise the great body of the common law. Being a part of the law, their existence need not be proved by witnesses, but the judges are bound to take notice of them ex-officio.

6. The next class of commercial paper in the order of time, after bills of exchange, is promissory notes. The origin of promissory notes is quite as obscure as that of bills of exchange. They were first used in England about the middle of the seventeenth century. They were regarded as choses in action, which could not be assigned so as to give a third party a right to commence an action thereon. In the year 1704, during the, reign of Queen

After acceptance, who is the primary debtor? How only are the drawer and indorsers liable?

5. By what term are bills of exchange in familiar language known? Give the illustration. By what law are bills of exchange governed? What is the Law Merchant? What does Blackstone call it? Under

Anne, in England, Parliament passed an act entitled, "An act for giving like remedy upon promissory notes as is now used upon bills of exchange." The reasons for passing the act are set forth in the preamble, as follows:

'WHEREAS, it has been held that notes in writing signed by the party who makes the same, whereby such party promises to pay unto any other person or his order, any sum of money therein mentioned, are not assignable or indorsable over within the custom of merchants to any other person, and that such person to whom the sum of money mentioned in such note is payable, cannot maintain an action by the custom of merchants against the person who first made and signed the same, and that any person to whom such note shall be assigned, indorsed, or made payable, could not within the custom of merchants maintain any action upon such note against the person who first drew and signed the same. Therefore, to the intent to encourage trade and commerce, which will be much advanced if such notes shall have the same effect as inland bills of exchange, and shall be negotiated in like manner.

"Be it enacted, etc."

7. By this law, all promissory notes for the payment of any sum of money mentioned in such notes, are made assignable or indorsable in the manner that inland bills of exchange are, or may be assignable or indorsable according to the custom of merchants. Since the passage of this law, all promissory notes payable absolutely and unconditionally in money only, have been known and recognized as "promissory notes within the statute." All promissory notes payable in any other property but money, and all conditional promissory notes, have been known as promissory notes not within the statute, and they are entitled to

what head does he rank it? Is it necessary to prove the existence of such customs by witnesses? What are the judges bound to do?

6. What is the next class of commercial paper in the order of time after bills of exchange? Is the origin of promissory notes well known? When were they first used in England? How were they regarded? In what year did Parliament pass an act in reference to promissory notes? During whose reign? What was the title of the act? In what were the reasons for passing the act set forth? Were promissory notes then assignable or indorsable within the custom of merchants? Could the assignee or indorsee maintain an action thereon? With what intent was this law passed?

7. What were made assignable or indorsable by this law? In what manner? Since the passage of this law, what promissory notes have been known and recognized as promissory notes within the statute?

none of the privileges and presumptions which belong to promissory notes within the statute, accorded to them by the custom of merchants.

8. Certain privileges are annexed to bank-bills, bills of exchange, checks, and promissory notes within the statute, which do not belong to any other unsealed instruments. They are presumed to be founded upon a valuable consideration between the original parties, whether the words "value received" appear upon the face of the paper or not. In an action between the original parties, the defendant may allege a want of consideration in his answer; and if he establish a want of consideration on the trial, judgment will be rendered for the defendant. Generally, when the paper has passed into the hands of a third party, the presumption of a valuable consideration between the original parties becomes absolute and cannot be rebutted. The indorsement of commercial paper within the statute is presumed to be founded upon a val uable consideration. This presumption may be rebutted between the indorser and his immediate indorsee. Generally, when this paper has passed beyond the indorsee, the presumption that it was indorsed for a valuable consideration becomes absolute.

What as promissory notes not within the statute? To what are promissory notes not within the statute not entitled?

8. To what are certain privileges annexed which do not belong to any other unsealed instruments? Upon what are they presumed to be founded? In an action between the original parties, what may the defendant allege in his answer? If the defendant establish his allegation on the trial, for whom must judgment be rendered? What is the general rule as to the presumption of value between the original parties, when the promissory note has passed into the hands of third parties? What is the presumption as to the indorsement of commercial paper within the statute? Between what parties may this presumption be rebutted? What is the general rule when such paper has passed beyond the indorsee?

CHAPTER XCIII.

NEGOTIABILITY OF COMMERCIAL PAPER.

1. COMMERCIAL paper is divided into two classes-negotiable and non-negotiable. Negotiable commercial paper is that which may be freely transferred from one owner to another, so as to pass the right of action to the holder, without being subject to any set-offs, or legal or equitable defences existing between the original parties, if transferred for a valuable consideration before maturity, and received without notice of any defect therein. Nonnegotiable commercial paper is that which is made payable to the payee therein named. It may be passed from one owner to another by assignment, or by indorsement, but it passes subject to all set-offs and legal or equitable defences existing between the original parties. Negotiable paper is made payable to the payee therein named or to his order, or to the payee or bearer, or to bearer; or some similar term is used showing that the maker intends to give the payee authority to transfer it to a third party, free from all set-offs or equitable or legal defences existing between himself and the payee.

2. A set-off is a debt already due to the defendant on the part of the plaintiff, or from the person through whom his title is derived, which defendant claims to have allowed to him in discharge of a part or the whole of the demand made by the plaintiff. Fraud, duress, circumvention, and taking undue advantage, will be a sufficient defence

1. Into what two classes is commercial paper divided? What is negotiable commercial paper? What is non-negotiable commercial paper? How is negotiable paper made payable?

2. What is a set-off? What will be sufficient defences if the action be between the original parties? If the paper be non-negotiable? If