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I. The French system, all but universally adopted by the Latin races, which owes its origin to Dupuis de la Serra (L'art des lettres de change), the well known Pactum de Cambiando(A.D. 1693), subsequently developed by Pothier in his Traité du Contrat de Change, A.D. 1763. Under this theory the Civil Law notion of an Emptio Venditio (assignment of a chose in action, of a debt) is abandoned, a special Contract of Bills of Exchange taking its place, the contract being perfected by delivery of the instrument to the holder. Pothier appears to have been keenly alive to the fact that the payable to order clause" constituted one of the essential characteristics of a Bill of Exchange, hence he insisted upon the name of the endorsee being stated in the endorsement. It was in a great measure owing to the influence of the name of Pothier that the Jurists who drew up the Code de Cominerce for the Code Napoléon embodied in it the theory of a special contract. Pardessus, in his “ Contrat de Change," defines a Bill of Exchange to be “a contract, by virtue of which one of the parties contracting agrees to pay to the other at a given place a certain sum of money he has received at the former place.” A Bill of Exchange coupled with an endorsement, and perfected by delivery, constitutes the mode of fulfilment of the original contract between the parties. This definition, ingenious as it is, yet when closely examined, proves to be the Emptio Venditio (pecuniæ) theory of the Italian School, only dressed up in a different garb. A Bill of Exchange being considered to be an agreement, according to the French Law, requires for its perfection three parties : Ist, a Drawer; and, a Drawee; and, 3rd, an Endorser. The transaction, in fact, partakes of the nature of Cession de Creánce, the instrument itself, which must be to order, being the means by which an assignment of a debt is effected, the Contract, and the instrument of a Bill of Exchange, however, resting respectively on independent ground. Im

* Pardessus, Traité, 1 p. 13, n. 15.

portant consequences flowed from the juridical principles adopted by the French jurist. Thus there arose a stricter adherence to the form of the wording of the contract, the non-negotiability of a Bill of Exchange, unless the instrument was made payable to order, and the transfer specially named in the endorsement; likewise, the necessity of stating the consideration given (valeur) on the face of the Bill. In other words, the instrument purporting to be negotiable was hampered by the restrictions which belong to an ordinary assignment of a chose in action.

II. In the North of Europe, England, Flanders, Germany, notwithstanding the existence of a large trade and extended commercial intercourse, to which the Hanseatic league owed its existence, the employment of Bills of Exchange was hardly known until the 16th and 17th centuries. By slow degrees, the merchants of Nüremberg taking the lead, Bills of Exchange came into use; the northern trader in the first instance adopting the Italian rule of law as his guide-the employment of an endorsement to effect transfer of the rights and interest in a Bill being quite unknown at that period. Tardily introduced, reluctantly adopted, the important juridical questions involved in the creation of a negotiable instrument were not even thought of at that time. It was not until the close of the 18th century that jurists turned their attention to the important question of the true juridical character of negotiable instruments. Attention once, however, having been aroused, monographs and treatises on this subject followed each other in quick succession. From the long list before me, I have selected a few to mark the progress made—and first, the great work of J. G. Heineccius, entitled Elementa Juris Cambialis," published in Amsterdam, A.D. 1742 ; followed by Püttmann's treatise, Grundsätze des Wechselrechts" (A.D. 1784), the treatises of J. G. Sieveking (A.D. 1799), of Mittermaier (A.D. 1821), of Eichhorn (A.D. 1823) succeeding those of the older authors.

Passing over this earlier period we arrive at the time when Dr. Karl Einert published his treatise on the Law of Bills of Exchange. Denounced at first by many as frivolous, and severely criticised by Jurists of that period, the theory of Dr. Einert has, because of its intrinsic scientific value, been accepted alike by the jurist and legislator of the great German Empire, until, finally, it may be said to be the ruling notion governing the laws of Bills of Exchange in all the great countries of the north of Europe, peopled by eighty millions of inhabitants.

It hence becomes absolutely necessary to consider the theory of Dr. Einert. It has already been explained that the Emptio Venditio notion of the Italian school, developed into a theory of a “ Special Bill of Exchange Contract” by Dupuis, and later on by Pothier, underlay the definition of a Bill of Exchange given by the Code de Commerce (Code Napoléon). The definition given by the French code, Dr. Einert asserts, is wholly erroneous, and in lieu of it he has laid down the following fundamental rules :-1. A Bill of Exchange (Tratte) and a Promissory Note (domicilirte Eigenwechsel) partake of the same characteristics, and are, juridically speaking, identical, for “ it is quite the same whether I say, upon this bill or draft pay Titius, or upon this Bill I promise to pay Titius.”* 2. The only difference between the two instruments consists in this, that the maker or drawer of a Bill of Exchange guarantees not only the payment, but also the acceptance, whilst the maker of a Promissory Note guarantees only payment. 3. It follows from this that the drawer is the principal debtor, the acceptor surety. A Bill of Exchange is thus, according to Einert, in its nature only an acknowledgment of a debt, a promise to pay, rendered, however, negotiable by adding the word “order.” Once admit this theory, and the necessary sequel is that a Bill of Exchange to order partakes of the character of a Bill to

* Dr. Karl Einert, Wechselrecht, § 2, 3

Bearer (au porteur), and on this point Unger,* Kuntze,t and other modern writers generally concur. The usage of bankers of in blanco drawings, that is, the issues of drafts without funds in the drawee's hands, points to the creation of paper money, analagous to bank-notes, only with this difference, that the acceptor is the surety who guarantees payment.

This practice of creating a circulating medium by the drawer is what Einert lays so much stress upon, in support of the correctness of his theory. I In framing the general law of Bills of Exchange for Germany, it must be understood that those who framed the law have studiously avoided adopting any one theory; on the contrary, they have endeavoured to embody only matured and universally accepted juridical opinions and usages of merchants, in so far as they were found applicable to actually existing circumstances. Nevertheless, it was all but unavoidable that some leading principle should be acknowledged. According to the Prussian Draft Law, A.D. 1847 (S. 6), which formed the basis of the deliberations of the Leipzig Conference, a Bill of Exchange is a formal literal Act, extending to the instrument itself the character of a commercial paper money. The framers of this draft further embodied in a Bill of Exchange the special characteristic given to it by Einert, namely, that it was only a modified form of a promise to pay a given sum of money to a third person, in which the maker was the principal debtor, and all the other parties sureties. They further accepted the theory that a Bill of Exchange was, in fact, paper money, its transfer constituting a payment. As regards Bills of Exchange or drafts to Bearer, with a view of guarding against the creation of unauthorised Bankers' Notes, Sections 9 to 15 prohibit their issue, whilst blank endorsements are held to be legal. It may be a matter of

Op. cit.

| Kuntze, Innhaber. Papier. p. 201. The accommodation acceptor was formerly held to be the priucipal debtor, Byles on Bills, p. 227.

surprise why the German jurists found it necessary to ignore the Code de Commerce in framing the German Law. The reason appears to have been, not because they differed in theory, but because in the case of many of the rules laid down by the Code de Commerce it was found that they were wholly inconsistent with the modern employment of Bills of Exchange. This divergence may be briefly summarised as follows:

1. The Code de Commerce is silent on the " pouvoir de négocier.” Strange to say, this right was originally contained in the Ordonnance of A.D. 1763, S. 16, that is, the right of endorsing over a Bill of Exchange to a third party at another place.

2. The broth Art. of the Code, namely, the “remise d'un lieu sur un autre," that is, the necessity of drawing from one place upon another, though easily evaded by making the draft for account of a third person, was found to be inconvenient.*

3. The Code de Commerce, Arts. 115-117, respecting the providing for payment, the covering of a draft. The rule making this necessary involved the placing of a fund in advance by the drawer in the hands of the drawee. A moment's reflection will suffice to prove that any restriction must necessarily be based upon a wrong conception, both of usage and of the principle of law, underlying the transaction.t

4. Blank Endorseinent.— The Code de Commerce is silent on this point; only by a somewhat forced application of the 138th Art. have the Courts of Law of France endeavoured to remedy the shortcomings of the Code by importing a procuration, or mandate.

• Biener, Wechselrecht, p. 472, refers to Hardung, who maintains that the Low of Bills of Exchange for Germany is but the putting into practice the theory of Dr. Karl Einert, pp. 472 and 487.

Biener, p. 488.

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