The Online Library of Liberty

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• Preface
• A Table of British Regnal Years
• Select Essays In Anglo-american Legal History: Volume Iii History of Particular Topics, Continued
• Part V.: Commercial Law
• 47.: Thomas Edwar Scrutton, General Survey of the History of the Law Merchant 1
• 48.: Spencer Brodhurst, the Merchants of the Staple 1
• 49.: Francis Marion Burdick, Contributions of the Law Merchant to the Common Law 1
• 50.: Edward Jenks, the Early History of Negotiable Instruments 1
• 51.: William Cranch, Promissory Notes Before and After Lord Holt 1
• 52.: William Reynolds Vance, the Early History of Insurance Law 1
• 53.: Edward Wyndham Hulme, the Early History of the English Patent System 1
• 54.: Joseph Henry Beale, Jr., the History of the Carrier’s Liability 1
• 55.: Cecil Thomas Carr, Early Forms of Corporateness 1
• 56.: William Mitchell, Early Forms of Partnership 1
• 57.: Samuel Williston, the History of the Law of Business Corporations Before 1800 1
• 58.: Simeon Eben Baldwin, History of the Law of Private Corporations In the Colonies and States 1
• Part VI.: Contracts
• 59.: James Barr Ames, the History of Assumpsit 1
• 60.: James Barr Ames, the History of Parol Contracts Prior to Assumpsit 1
• 61.: John William Salmond, the History of Contract 1
• 62.: Crawford Dawes Hening, History of the Beneficiary’s Action In Assumpsit 1
• 63.: Oliver Weldell Holmes, Jr., the History of Agency 1
• Part VII: Torts
• 64.: James Barr Ames, the History of Trover 1
• 65.: Van Vechten Veeder, the History of the Law of Defamation 1
• 66.: John Henry Wigmore, Responsibility For Tortious Acts: Its History 1
• Part VIII: Property (in General)
• 67.: James Barr Ames, the Disseisin of Chattels 1
• 68.: Frederick William Maitland, the Mystery of Seisin 1
• 69.: Arthur George Sedwick and Frederick Scott Wait, the History of the Action of Ejectment In England and the United States 1
• 70.: Harold Dexter Hazeltine, the Gage of Land In MediÆval England 1
• 71.: Arthur Underhill, Changes In the English Law of Real Property During the Nineteenth Century 1
• Part IX.: Wills, Descent, Marriage
• 72.: Charles Gross, the MediÆval Law of Intestacy 1
• 73.: Oliver Weldell Holmes, Jr., Executors In Earlier English Law 1
• 74.: Robert Caillemer, the Executor In England and On the Continent 1
• 75.: Melville Madison Bigelow, the Rise of the English Will 1
• 76.: James Bryce, Marriage and Divorce Under Roman and English Law 1
• List of Authors Contributing

47.

GENERAL SURVEY OF THE HISTORY OF THE LAW MERCHANT1

By Thomas Edward Scrutton2

IF you read the law reports of the seventeenth century you will be struck with one very remarkable fact; either Englishmen of that day did not engage in commerce, or they appear not to have been litigious people in commercial matters, each of which alternatives appears improbable. But it is a curious fact that one finds in the reports of that century, two hundred years ago, hardly any commercial cases. If one looks up the Law of Bills of Exchange, “the cases on the subject are comparatively few and unimportant till the time of Lord Mansfield.”3 If you turn to Policies of Insurance, and to the work of Mr. Justice Park on the subject published at the beginning of this century, you find him saying: “I am sure I rather go beyond bounds if I assert that in all our reports from the reign of Queen Elizabeth to the year 1756, when Lord Mansfield became Chief Justice of the King’s Bench, there are sixty cases upon matters of insurance.”4 If you come to Charter Parties and Bills of Lading, which have always been productive of litigation, you find Sir John Davies in the seventeenth century saying that “until he understood the difference between the Law of Merchants and the Common Law of England, he did not a little marvel what should be the cause that in the books of the Common Law of England there should be found so few cases concerning merchants and ships, but now the reason was apparent, for that the Common Law did leave these cases to be ruled by another law, the Law Merchant, which is a branch of the Law of Nations.”1

The reason why there were hardly any cases dealing with commercial matters in the Reports of the Common Law Courts is that such cases were dealt with by special Courts and under a special law. That law was an old-established law and largely based on mercantile customs. Gerard Malynes, who wrote the first work on the Merchant Law in England, called his book, published in 1622, “Consuetudo vel Lex Mercatoria,” or the Ancient Law Merchant; and he said in his preface: “I have entituled the book according to the ancient name of Lex Mercatoria, and not Jus Mercatorum, because it is a customary law approved by the authority of all kingdoms and commonweales, and not a law established by the sovereignty of any prince.” And Blackstone, in the middle of the last century, says: “The affairs of commerce are regulated by a law of their own called the Law Merchant or Lex Mercatoria, which all nations agree in and take notice of, and it is particularly held to be part of the law of England which decides the causes of merchants by the general rules which obtain in all commercial countries, and that often even in matters relating to domestic trade, as for instance, in the drawing, the acceptance, and the transfer of Bills of Exchange.”2 Later than Blackstone, Lord Mansfield lays down that “Mercantile Law is not the law of a particular country, but the law of all nations”;3 while so recently as 1883 you find Lord Blackburn saying in the House of Lords that “the general Law Merchant for many years has in all countries caused Bills of Exchange to be negotiable; there are in some cases differences and peculiarities which by the municipal law of each country are grafted on it, but the general rules of the Law Merchant are the same in all countries.”1

Now if we follow the growth of this Law Merchant or Mercantile Law, which was two hundred years ago so distinct from the Common Law, we find it in England going through three stages of development.2 The first stage may be fixed as ending at the appointment of Coke as Lord Chief Justice in the year 1606, and before that time you will find the Law Merchant as a special law administered by special Courts for a special class of people.

In the first place as to the special Courts. The greater part of the foreign trade of England, and indeed of the whole of Europe at that time, was conducted in the great fairs, held at fixed places and fixed times in each year, to which merchants of all countries came; fairs very similar to those which meet every year at the present time at Novgorod in Russia, and at other places in the East. In England, also, there were then the great fairs of Winchester and Stourbridge, and the fairs of Besançon and Lyons in France, and in each of those fairs a Court sat to administer speedy justice by the Law Merchant to the merchants who congregated in the fairs, and in case of doubt and difficulty to have that law declared on the basis of mercantile customs by the merchants who were present. You will find this Court mentioned in the old English law books as the Court Pepoudrous, so called because justice was administered “while the dust fell from the feet,” so quick were the Courts supposed to be. “This Court is incident to every fair and market because that for contracts and injuries done concerning the fair or market there shall be as speedy justice done for advancement of trade and traffic as the dust can fall from the feet, the proceeding there being de hora in horam.”3 Indeed, so far back as Bracton in the thirteenth century, it had been recognized that there were certain classes of people “who ought to have swift justice, such as merchants, to whom justice is given in the Court Pepoudrous.”1 The records of these Courts are few, for obviously in Courts for rapid business law reporters were rather at a discount. As a consequence, “there is no part of the history of English law more obscure than that connected with the maxim that the Law Merchant is part of the law of the land.”2 We are, however, fortunate enough to have one or two records of the Courts of the Fairs. The Selden Society has succeeded in unearthing the Abbot’s roll of the fair of St. Ives held in 1275 and 1291,3 containing a series of cases which show how the merchants administered the Law Merchant in the Courts of the fair, and why such cases did not come into the King’s Court. For instance:—“Thomas, of Wells, complains of Adam Garsop that he unjustly detains and deforces from him a coffer which the said Adam sold to him on Wednesday next after Mid Lent last past for sixpence, whereof he paid to the said Adam twopence and a drink in advance” — (it appears to have been a very good mercantile custom, still existing, to “wet a bargain,” and the drink was a matter to which great importance was attached by the merchants present); “and on the Octave of Easter came and would have paid the rest, but the said Adam would not receive it nor answer for the said coffer, but detained it unconditionally to his damage and dishonour, 2s., and he produces suit. The said Adam is present and does not defend. Therefore let him make satisfaction to the said Thomas and be in mercy for the unjust detainer; fine 6d.; pledge his overcoat.” The next defendant was not so fortunate as to have an overcoat. “Reginald Picard of Stamford came and confessed by his own mouth that he sold to Peter Redhood of London a ring of brass for 5½d., saying that the said ring was of the purest gold, and that he and a one-eyed man found it on the last Sunday in the churchyard of St. Ives, near the cross.” (One fancies one has heard that tale about the brass ring before.) “Therefore it is considered that the said Reginald do make satisfaction to the said Peter for the 5½d. and be in mercy for the trespass; he is poor; pledge his body.” The next case introduces the Law Merchant. “Nicolas Legge complains of Nicolas of Mildenhall for that unjustly he impedes him from having, according to the usage of merchants, part in a certain ox which Nicolas of Mildenhall bought in his presence in the village of St. Ives on Monday last past to his damage 2s., whereas he was ready to pay half the price, which price was 2s. 6d. And Nicolas of Mildenhall defends, and says that the Law Merchant does well allow that every merchant may participate in a bargain in the butcher’s trade if he claim a part thereof at the time of the sale; but to prove that the said Nicolas Legge was not present at the time of the purchase nor claimed a part thereof he is ready to make law.” Then they went to the proof. The custom of the Law Merchant relied on admitted any merchant standing by to claim a share in any bargain on paying a share of the price. The defence is, “You were not there, so you cannot claim.” The next and last case is one which puzzled the Court, and therefore I omit the details, but it is recited in the Abbot’s roll: “And the case is respited till it shall be more thoroughly discussed by the merchants. And the merchants of the various commonalties and others being convoked in full Court it is considered”—and then they go on to discuss it. There you see the Merchants’ Court at work, giving quick justice in all mercantile disputes, and in cases of doubt calling upon the merchants present to declare what the Law Merchant is. So much for the fairs.

In most seaport towns also you would find a similar Court dealing with cases arising out of ships. In the Domesday Book of Ipswich1 it is stated, “The pleas between strange folk that men call ‘pypoudrous’ should be pleaded from day to day. The pleas in time of fair between stranger and passer should be pleaded from hour to hour, as well in the forenoon as in the afternoon, and that is to wit of plaints begun in the same time of fair, and the pleas given to the law marine for strange mariners passing, and for them that abide not but their tide, should be pleaded from tide to tide.” Any ship coming into the port of Ipswich with a dispute about its Charter Party or Bill of Lading may get summary justice at once from this Court at Ipswich between tide and tide. Stress may be laid on the fact that the Courts sat in the afternoon, because at that time the King’s Courts only sat from eight in the morning till eleven and then adjourned for the rest of the day. “For in the afternoons these Courts are not holden. But the suitors then resort to the perusing of their writings, and elsewhere consulting with the serjeants-at-law and other their counsellors,”1 so that the time taken up in consultation by the Courts in London was taken up by the Courts at Ipswich in dealing summarily with cases, and letting the strange mariners go who were only waiting for their tide.

There were special Courts by statute, of which a number of “grave and discreet merchants” were necessary members, in order that the Mercantile Law founded on the custom of merchants might be duly applied to the case before them.2 The law which these Courts administered was what was called by merchants the Law Merchant and Law of the Sea, and it was common to nearly every European country. Much of it was to be found in a series of codes of Sea Laws, such as the Laws of Oleron and Wisbury, and the Consolato del Mare, embodying the customs and practices of merchants of different countries, and it was not the Common Law of England. Further, it was only for a particular class. You had to show yourself to be a merchant before you got into the Mercantile Court; and until about two hundred years ago it was still necessary to show yourself to be a merchant in the Common Law Courts before you could get the benefit of the Law Merchant.3

Now the second stage of development of the Law Merchant may be dated from Lord Coke’s taking office in 1606, and lasts until the time when Lord Mansfield became Chief Justice in 1756, and during that time the peculiarity of its development is this: that the special Courts die out, and the Law Merchant is administered by the King’s Courts of Common Law, but it is administered as a custom and not as law, and at first the custom only applies if the plaintiff or defendant is proved to be a merchant. In every action on a Bill of Exchange it was necessary formally to plead “secundum usum et consuetudinem Mercatorum”—according to the use and custom of merchants;1 and it was sometimes pleaded that the plaintiff was not a merchant but a gentleman.2 And as the Law Merchant was considered as custom, it was the habit to leave the custom and the facts to the jury without any directions in point of law, with a result that cases were rarely reported as laying down any particular rule, because it was almost impossible to separate the custom from the facts; as a result little was done towards building up any system of Mercantile Law in England. The construction of that system began with accession of Lord Mansfield to the Chief Justiceship of the King’s Bench in 1756, and the result of his administration of the law in the Court for thirty years was to build up a system of law as part of the Common Law, embodying and giving form to the existing customs of merchants. When he retired, after his thirty years of office, Mr. Justice Buller paid a great tribute to the service that he had done. In giving judgment in Lickbarrow v. Mason,3 he said: “Thus the matter stood till within these thirty years. Since that time the Commercial Law of this country has taken a very different turn from what it did before. Lord Hardwicke himself was proceeding with great caution, not establishing any general principle, but decreeing on all the circumstances put together. Before that period we find in Courts of Law all the evidence in mercantile cases was thrown together; they were left generally to the jury, and they produced no established principle. From that time we all know the great study has been to find some certain general principle, not only to rule the particular case under consideration, but to serve as a guide for the future. Most of us have heard those principles stated, reasoned upon, enlarged, and explained till we have been lost in admiration at the strength and stretch of the human understanding, and I should be sorry to find myself under the necessity of differing from Lord Mansfield, who may truly be said to be the founder of the Commercial Law of this country.” Lord Mansfield, with a Scotch training, was not too favourable to the Common Law of England, and he derived many of the principles of Mercantile Law, that he laid down, from the writings of foreign jurists, as embodying the custom of merchants all over Europe. For instance, in his great judgment in Luke v. Lyde,1 which raised a question of the freight due for goods lost at sea, he cited the Roman Pandects, the Consolato del Mare, laws of Wisbury and Oleron, two English and two foreign mercantile writers, and the French Ordonnances, and deduced from them the principle which has since been part of the Law of England.2 While he obtained his legal principles from those sources, he took his customs of trade and his facts from Mercantile Special Juries, whom he very carefully directed on the law; and Lord Campbell, in his life of Lord Mansfield, has left an account of Lord Mansfield’s procedure. He says:3 “Lord Mansfield reared a body of special jurymen at Guildhall, who were generally returned on all commercial cases to be tried there. He was on terms of the most familiar intercourse with them, not only conversing freely with them in Court, but inviting them to dine with him. From them he learned the usages of trade, and in return he took great pains in explaining to them the principles of jurisprudence by which they were to be guided. Several of these gentlemen survived when I began to attend Guildhall as a student, and were designated and honoured as ‘Lord Mansfield’s jurymen.’ One in particular I remember, Mr. Edward Vaux, who always wore a cocked hat, and had almost as much authority as the Lord Chief Justice himself.”

Since the time of Lord Mansfield other judges have carried on the work that he began, notably Abbott, Lord Chief Justice, afterwards Lord Tenterden, the author of “Abbott on Shipping,” Mr. Justice Lawrence, and the late Mr. Justice Willes; and as the result of their labours the English Law is now provided with a fairly complete code of mercantile rules, and is consequently inclined to disregard the practice of other countries. In Lord Mansfield’s time it would have been a strong argument to urge that all other countries had adopted a particular rule; at the present time English Courts are not alarmed by the fact that the law they administer differs from the law of other countries.

[1 ]This Essay appeared as pp. 4-16, Chap. I, of “The Elements of Mercantile Law,” 1891 (London: Wm. Clowes & Sons), a course of lectures delivered before the Incorporated Law Society. The same passage was afterwards reprinted in the late Professor Huffcut’s “Cases on Bills and Notes.”

[2 ]A biographical notice of this author is prefixed to Essay No. 7, in Vol. I of these Essays.

[3 ]Chalmers, Bills, Pref. p. 36.

[4 ]Park, I. Pref. 43.

[1 ]Zouch, Jurisdiction of the Admiralty (1686), p. 89.

[2 ]Blackstone, Commentaries, I. 273; IV. 67.

[3 ]Luke v. Lyde, 2 Burr. at p. 887.

[1 ]M’Lean v. Clydesdale Bank, 9 App. C. at p. 105.

[2 ]Macdonell, Preface to Smith’s Mercantile Law, p. 82.

[3 ]Coke, Inst. IV. 272.

[1 ]Bracton, f. 334.

[2 ]Blackburn on Sale, 1st ed. p. 207.

[3 ]Selden Society, Vol. II. pp. 130 et seq.

[1 ]Black Book of Admiralty, Rolls Series, II. 23.

[1 ]Sir J. Fortescue.

[2 ]E. g. the Court established by 43 Eliz. c. 12, of which eight “grave and discreet merchants” were to be members, who were to determine all insurance cases in a brief and summary course, without formalities of pleadings or proceedings.

[3 ]Vide post, pp. 29, 30.

[1 ]Chalmers, Bills, Pref. p. 44.

[2 ]Cf. Sarsfield v. Witherby (1692), Carthew, 82.

[3 ]2 T. R. 73.

[1 ]2 Burr. 883.

[2 ]Cf. the judgment of Willes, J., in Dakin v. Oxley, 15 C. B. N. S. 646, for similar authorities.

[3 ]Campbell’s Lives of the Lord Chief Justices, II. 407, note.