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§ 4. ESSENTIALS OF CONTRACT: DEFENCES.

Law merchant adopts common law doctrine.

The law merchant adopts the doctrines of the common law in regard to the essentials of contract; whatever the form of the contract in question, whether that of maker, acceptor, drawer, or indorser, or other party, it must be supported by valuable consideration, there must be agreement, and the parties liable must be competent to contract. And that is true, not only between immediate parties, but between mediate or remote parties as well. Thus, there must be a valuable consideration, not merely to support an action by the payee of a promissory note against the maker, — there must somewhere be a valuable consideration to support an action against the maker by the payee's indorsee. So if there be a want of agreement between the maker and the payee, there will be a want of agreement, upon the same facts, between the maker and the payee's indorsee; and so if the maker is incompetent to contract with the payee, he is incompetent to contract with the payee's indorsee.

So also of defences; all defences of the common law are defences, so far as they are available under the doctrine of negotiability, in the law merchant. The question in other words is not whether a defence good by the common law is good by the law merchant, but whether the defence can be alleged against the particular plaintiff, who may be an indorsee or the like.

§ 5. MATURITY OF THE CONTRACT.

The contract reaches what is called its maturity as soon as it is due, that is, at the earliest time when demand of payment is authorized; its maturity is past, and the contract is overdue,

v. Schaeffer, 173 Mass. 443; Hall v. First National Bank, id. 16; Heist v. Hart, 73 Penn. St. 286, 289; Henshaw v. Dutton, 59 Mo. 139; Hubble v. Murphy, 1 Duval, 278; Minneapolis Threshing Machine Co. v. Davis, 40 Minn. 110, 115; Smith v. Munsetter, 58 Minn. 159. The oral condition in some of these cases related indeed to the contract, but there is no sound distinction between such cases and treating an understanding of exemption from liability as a condition in the delivery of the instrument. See Minneapolis Threshing Machine Co. v. Davis, supra.

What 'maturity' means:

on the following day, whether the following day be a secular or a non-secular day. If then the instrument is entitled to grace, it will reach its maturity in the morning of the when contract last day of grace, at a reasonable hour, and not overdue. before that day; if it is not entitled to grace, it will reach its maturity as if it were a common law contract, except as the subject may be regulated by statute.1 An instru ment payable on demand, in terms, in legal effect, or by statute, is due, or at maturity, from the moment of delivery, that is, without grace, and is overdue after known demand, or after the lapse of a reasonable time, or as statute may declare.

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As the undertaking is not overdue until the day of maturity has passed, no action on the instrument can in principle be When suit can maintained before that time. Some confusion exbe brought. ists, however, in the authorities upon this point, arising probably from the fact that there may be a dishonor of the instrument on the day of its maturity, a dishonor for the purpose of giving valid notice thereof on that day. But there may well be a dishonor for the purpose of notice, upon a demand and refusal, on the day of maturity, though there may be no dishonor on that day for the purpose of suit. The better rule therefore is, that the parties to the instrument are entitled to the whole of the day of maturity, and are exempt from suit accordingly. And this too whether the parties are primarily or secondarily liable.

1 See N. I. L. §§ 78, 82, 92, 93.

2 Nash v. De Freville, 1900, 2 Q. B. 72, 87. Kennedy v. Thomas, 1894, 2 Q. B. 759, C. A.

3 N. I. L. § 78.

Kennedy v. Thomas, supra; Wiesinger v. First National Bank, 106 Mich. 291; Sutcliffe v. Humphreys, 58 N. J. 42; Osborn v. Moncure, 3 Wend. 170; Smith v. Aylesworth, 40 Barb. 104; Oothout v. Ballard, 41 Barb. 33; Bevan v. Eldridge, 2 Miles (Penn.) 353; Taylor v. Jacoby, 2 Barr, 497; Smith v. Bank of Washington, 5 Serg. & R. 318 (suit against indorser). Contra, Staples v. Franklin Bank, 1 Met. 43; Estes v. Tower, 102 Mass. 65; Veazie Bank v. Wynn, 40 Maine, 62; Greeley v. Thurston, 4 Greenl. 479; Flint v. Rogers, 3 Shep. 67; Wilson v. Williman, 1 Nott & McC. 440; Dennie v. Walker, 7 N. H. 201; Coleman v. Ewing, 4 Humph. 241.

According to Sutcliffe v. Humphreys, supra, suit upon au instrument pay.

The question of the time when suit can be brought has usually arisen in the case of instruments entitled to grace; but grace cannot create any peculiarity in the matter. The day of the maturity will (or will not) be too soon for suit whether the instrument is entitled to grace or not. The question of the time for making presentment, for the purpose of fixing the liability of secondary parties, will be considered in a later chapter.

able at bank cannot be brought even after banking hours of the day of matu rity. The maker in all cases has the whole of the day.

The day of maturity may be hastened by agreement in the instrument that default in paying interest or instalments of the principal shall make the whole sum payable thereupon. Fant v. Wickes, 10 Texas Civ. App. 394; Wilson v. Campbell, 110 Mich. 580; Carlon v. Kenealy, 12 M. & W. 139; post, p. 31.

CHAPTER III.

REQUISITES: ANALYSIS OF DEFINITION.

[The student should refer to the definitions given ante, p. 11.]

§ 1. WRITTEN PROMISE: WRITTEN ORder.

Writing required of the whole instrument.

PROMISSORY notes, bills of exchange, and cheques must be in writing; no oral promise or order would be treated on the same footing, though the oral undertaking might be a perfectly good contract, a contract of the common law. The requirement of a writing is a requirement of the law merchant as derived from the custom of merchants. The whole instrument must be in writing, and all the terms necessary to constitute it a bill, note, or cheque must be found within the four corners of the piece of paper upon which it is written. So far as the primary contract is concerned, or so far as the original instrument is an order, it must on its face so plainly declare itself as to leave no place for external evidence further than to identify the parties designated by it. A promise to pay the amount of one's debt would be an example; however certain the sum due, the instrument would not be a promissory note because of the necessity of resorting to external evidence to prove the amount payable. The requirement of the law merchant in this particular (as in many others) is unique; but the reason is obvious the instrument is currency, and could not run on crutches.

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The law merchant has never prescribed any particular writing material, or any particular material for receiving the writing.

1 The Statute only affirms the previous law. N. I. L. § 8, 1.

2 Compare Sperry v. Horr, 32 Iowa, 184; Cases, 15, 16.

8 The reason in strictness applies to negotiable instruments only; but the rule itself probably extends to non-negotiable bills, notes, and cheques as well.

The instrument may be written with pencil as well as with ink,' and, it seems, upon any material firm enough of itself to hold the writing.

A promissory note in common form, as shown in the example, contains a promise, expressed by that word. That however is unnecessary, but what will satisfy the Express promrule, which requires a promise, is not clearly de- ise in a note. termined. It is generally laid down that the promise must be express; hence that the mere fact that a debt is acknowledged is not enough, for that at best would but raise an implied promise. For example: Due C & B $17.14' is not, it seems, a promissory note, for want of an express promise to pay. The reason for the rule is plain; were it not for the requirement of an actual promise, every debt and every sum due for tort might be turned into a promissory note by acknowledging it in writing.

But to say that a promise must be express is not to say that the word 'promise' must be used; a promise is express when either the word 'promise,' or any equivalent word or expression, is used.

What is the equivalent of 'promise '? The question has proved troublesome. It is a question of interpretation of what amounts to a declaration of the maker's will to Equivalent of pay; but interpretation has sometimes gone well promise. afield in the matter. Setting any certain time for payment in express terms appears to be accepted as an equivalent; and this even though the words of time are 'on demand.' For example: 'Due J A $94.91 on demand' is a promissory note; it being deemed an express promise to pay. The use of words of negotiability is also treated as an equivalent. For example: Due R, or bearer, $200.26.' This on like ground is a promis1 See Geary v. Physic, 5 Barn. & C. 234; Brown v. Butcher's Bank, 6 Hill, 443; Reed v. Roark, 14 Texas, 329.

2 Ante, p. 12.

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3 N. I. L. § 8, 2, does not require the use of the word 'promise,' though it declares that the instrument must contain a 'promise.'

4 See Currier v. Lockwood, 40 Conn. 349.

Smith v. Allen, 5 Day, 337; Kimball v. Huntington, 10 Wend. 675.

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