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• Preface to the Fifth Edition
• Table of Mediaeval Cases
• Table of Modern Cases N.b. the Report References, Which Appeared In This Table In Earlier Editions, Will Be Found Incorporated In the Footnotes In the Text.
• Table of Laws and Statutes
• A Concise History of the Common Law
• Book One: a General Survey of Legal History
• Part 1: The Crown and the State
• Summary
• Chapter 1: The Anglo-saxon Period: Races and Religion
• Chapter 2: The Conquest to Henry II: The Beginnings of Administration
• Chapter 3: The Great Charters: Law Separates From Administration
• Chapter 4: Edward I to Richard II: Statutes and Social Revolution
• Chapter 5: The Fifteenth Century: the Problem of Enforcement
• Chapter 6: The Tudors: Renaissance, Reformation and Reception
• Chapter 7: The Stuarts: Struggle For the Supremacy of Law
• Chapter 8: The Eighteenth Century: Industrial Revolution
• Chapter 9: The Nineteenth Century: Liberalism and Reform
• Part 2: The Courts and the Profession
• Summary
• Chapter 1: The Communal Courts
• Chapter 2: Seignorial Jurisdiction
• Chapter 3: The Crown and Local Courts
• Chapter 4: The Jury
• Chapter 5: The Origins of the Central Courts
• Chapter 6: The Elaboration of the Judicial System: 1307-1509
• Chapter 7: The Tudors and the Common Law Courts
• Chapter 8: The Rise of the Prerogative Courts
• Chapter 9: Prerogative, Equity and Law Under the Stuarts
• Chapter 10: Parliament and the Privy Council
• Chapter 11: The Courts In the Nineteenth Century
• Chapter 12: The Legal Profession
• Chapter 13: The Growth of the Judiciary
• Chapter 14: Professional Literature
• Part 3: Some Factors In Legal History
• Summary
• Chapter 1: The Civil Law of Rome
• Chapter 2: The Canon Law of the Church
• Chapter 3: Custom
• Chapter 4: Legislation
• Chapter 5: The Principle of Precedent
• Book Two: Special Part
• Part 1: Procedure
• Summary
• Chapter 1: The Forms of Action
• Chapter 2: Civil Procedure
• Chapter 3: Pleading
• Part 2: Crime and Tort
• Summary
• Chapter 1: Criminal Procedure
• Chapter 2: The Felonies
• Chapter 3: Misdemeanours, Trespass and Tort
• Chapter 4: Liability, Civil and Criminal
• Chapter 5: Defamation
• Part 3: Real Property
• Summary
• Chapter 1: Feudalism
• Chapter 2: Feudalism In England
• Chapter 3: Inheritance and Alienability
• Chapter 4: Tenures and Incidents
• Chapter 5: The Rise of the Entail
• Chapter 6: The Common Law Estates Down to 1540
• Chapter 7: Uses and the Statute
• Chapter 8: The Later Law of Real Property
• Chapter 9: The Mortgage
• Chapter 10: Conveyances
• Part 4: Contract
• Summary
• Chapter 1: Origins
• Chapter 2: The Fourteenth Century
• Chapter 3: Assumpsit to Slade’s Case
• Chapter 4: Contract After Slade’s Case
• Chapter 5: Law Merchant and Admiralty
• Part 5: Equity
• Summary
• Chapter 1: The Early History of Equity
• Chapter 2: The Formative Period
• Chapter 3: The Work of the Chancellors
• Part 6: Succession
• Summary
• Chapter 1: Inheritance
• Chapter 2: Intestacy
• Chapter 3: Wills

CHAPTER 5

LAW MERCHANT AND ADMIRALTY

We have several times mentioned the law merchant, particularly in connection with the history of contract, and so a brief account of its origin and progress must be included here, in spite of the great difficulty of dealing with an international subject with many bewildering ramifications. Its history is the subject of much learned controversy, and the literature in English, and for its history in England, is very scanty.1

SOURCES OF MARITIME AND MERCANTILE LAW

It is natural that the sources of European mercantile law should be found in the lands adjoining the Mediterranean Sea. From very early times there was much sea-borne commerce there, and business practices were based upon very old traditions. Two or three centuries before Christ there was a body of law known as the Lex Rhodia2 which grew up in the great maritime centre in the island of Rhodes. The Roman law also contained a great deal of commercial matter which may have been originally evolved by the mercantile community. When the Corpus Juris of Justinian became out of date, the eastern Emperors, Basil I (867-886) and Leo VI (886-912), published the Basilica near the end of the ninth century, which contained a collection of maritime rules, while a new collection had probably already become current under the name of the Rhodian Sea Law.1

The decline of the empires, east and west, defeated these efforts to compile collections of wide applicability, and so commercial law during the middle ages became mainly a matter of local customs. From the eleventh century onwards, therefore, the sources will consist of the custumals of numerous commercial and maritime towns, and diversity inevitably increased as the law became localised. In some cases we have collections of decisions—for customary law is very prone to seek its sources in decisions as well as in texts. At the same time, local legislation adds to the bulk of each local stock and to the diversity of the whole. Thus we find ordinances at Trani purporting to come2 from the year 1063; Amalfi claims to have published its laws as early as 954, and a manuscript claims 1010 as their date; Pisa had a constitutum between 1156 and 1160, and in the thirteenth century such mercantile local custumals become increasingly common. Three of them were particularly famous and influential. Of these, the Consulato del Mare dates from about 1340 and was compiled, unofficially it seems, from the custom of Barcelona. The Rolls of Oléron are based on decisions of the merchant court of the little island of Oléron. They seem to date from the twelfth century, but now exist in the form of several later redactions. For some time Oléron (being part of Guienne) was under the English crown, and this, together with the fact that the great wine trade from Bordeaux to England passed close by, may explain why the laws of Oléron enjoyed special prestige in this country, and were copied into the Black Book of the Admiralty,3 the Oak Book of Southampton4 and the Little Red Book of Bristol.5 Much later, and remoter, was the third great code, that of Wisby, which was current in parts of the Baltic. Even Wisby, however, came under the influence of the laws of Oléron through the channel of a Flemish version.6

The above are mainly maritime laws; the mobility of sea-borne trade easily accounts for the spread of particular customs along shipping routes. The custom of merchants on land seems to have been more varied. Every town tended to develop a more or less comprehensive body of merchant custom,7 and hundreds of these custumals are still extant. Divergences in detail are very numerous, but even here attempts were made to secure some sort of uniformity.

There was a movement from local law towards a cosmopolitan law, and this process was not completed until after the close of the middle ages. The factor which promoted the change was, of course, the international character of commerce, which necessarily brought merchants of different countries into contact with one another in the great fairs and seaports. Then, too, the smallness and weakness of many of the states had given rise to the formation of guilds of merchants who acquired considerable privileges. These privileges naturally grew in extent as commerce increased and spread over a wide area. Unification was further assisted by the dominant position in Mediterranean trade acquired by certain Italian cities, and consequently the spread of their particular customs. Many towns actually organised research in comparative legislation, and entrusted to officials called emendatori or siatutarii the task of examining the laws and customs of other communities and recommending the adoption of those features which seemed to them desirable. There was, therefore, a deliberate attempt to promote uniform legislation. We have already noticed the tendency in England for towns to acquire the customs of some great city such as London. The Church, too, was exerting a growing influence upon mercantile practice. Particularly in the law of contract the Church asserted the principle of keeping faith—a principle which must lie at the root of commercial life.1 And finally, there came the great Reception of Roman law which provided a scientific apparatus for the development of mercantile law, which, however, remained in substance deeply tinged with canonist doctrine.

THE ENGLISH SOURCES

The specifically English sources during the middle ages are of the sort already described. The borough charters and custumals are the most accessible, and to them may be added the volumes of black, white, red and other books which contained the memoranda of many city jurisdictions. London had several such volumes,2 and the officers of the Crown themselves kept a “black book of the admiralty”.3 In some cases it is possible to add actual records of mercantile jurisdictions, such as London possesses in abundance;4 we have already mentioned some surviving rolls of fair and market courts.5

The systematic treatment of law merchant in formal text-books does not appear in England until after the middle ages, and even then it was merchants rather than lawyers who undertook the task. We had several writers of eminence on international law, and Professor Welwod of St Andrews published an Abridgement of All the Sea Lawes in 1613, but academic writers were chiefly interested in the polemics over admiralty, the freedom of the seas and the Church courts in which they were professionally interested. A notary, John Marius, gave some Advice concerning Bils of Exchange in 1651, but the merchant Gerard Malynes wrote the first general English treatise on commercial law, Consuetudo, vel Lex Mercatoria, in 1622. The law is put in the midst of all the other matters which interested merchants—weights and measures, geodesy, theory of numbers, economics—and although he was not a lawyer, he had a wide and accurate knowledge of the principal civilian works on his subject. In the eighteenth century the principal work was Beawes’ Lex Mercatoria Rediviva, which appeared in 1758 and had a successful career until about 1789, when a flood of new works in the modern style finally separated commercial law from the practice and theory of trade.

COMMERCIAL JURISDICTIONS

The institutions which administered commercial and maritime law were the civic authorities in numerous continental towns, who frequently had the title of consuls. They appear in Milan as early as 1154 and seem first to have been the officials of a gild merchant, although their importance soon made it necessary for the cities to associate themselves with the work. Markets and fairs had their own machinery for applying commercial law; most famous of them are the courts of piepowder, which were specially concerned with wandering merchants who travelled from market to market. The word seems to have been at first a nickname referring to the “dusty feet” of its clients, but was later accepted as the official style of the court. The English courts of piepowder closely resembled similar courts on the continent,1 but just as the royal Admiralty superseded the local maritime courts, so a system of royal courts was set up by statute at various times in the fourteenth century which competed seriously with the local mercantile courts. These were called courts of the staple.2

MARITIME JURISDICTIONS

For a long time the administration of maritime as well as commercial law rested in the hands of local jurisdictions. Seaport towns had their own maritime courts sitting on the seashore from tide to tide, but the only ones which survived in active working in England into modern times was the jurisdiction of the group of five towns called the Cinque Ports, which is the oldest existing maritime jurisdiction in England.3 The other local maritime courts in the end were largely superseded by a newer and more centralised jurisdiction, the courts of Admiralty, held in the name of the Lord High Admiral who was appointed by the Crown.

The office of admiral1 resembled those of the chancellor, steward, constable and marshal in that it gradually developed a judicial side. At times there were several admirals, each with duties confined to particular seas, but eventually it became the practice to appoint a single admiral with powers varying according to his commission. The earliest distinct reference to a court of Admiralty in England is in 1357, and in 1361 we have the first known record of such a case2 which was heard before Sir Robert Herle, “admiral of all the fleets”. The case is interesting, for the defendant having pleaded several defences, the plaintiffs demurred; but the court overruled them, “since this court, which is the office of the admiral, will not be so strictly ruled as the other courts of the realm which are ruled by the common law of the land, but is ruled by equity and marine law, whereby every man will be received to tell his facts . . . and to say the best he can” for his defence.

In 1301 we find English and foreign merchants endeavouring to use the court of the steward and marshal for commercial causes, both because of its speed, and also because it took cognisance of contracts made out of the realm; their prayer for its further recognition failed: non potest fieri quia contra magnam cartam.3

In the meanwhile, however, it was the council which had most influence. All through the middle ages the council had made itself the protector of foreign merchants for the obvious reason that dealings with them frequently raised matters of international politics. The council developed this position, and in the later sixteenth century acquired a considerable commercial jurisdiction both original and also of a supervisory character over other courts, such as Admiralty, sometimes exercising it in the Star Chamber. Civilians were regularly called in to assist the council, for the commercial and maritime matters in the Digest were taken as forming part of the custom of merchants, while common law judges upon occasion would be consulted too. This jurisdiction of the council in the later sixteenth century was matched by that of the Star Chamber in the earlier part of the century and for obvious reasons.

The court of Admiralty has left us regular records from the year 1524, and it is clear that in the Tudor period it exercised a steady and direct influence upon both commercial and maritime law. Its procedure, however, was of the slower civilian type, and not that of the continental jurisdictions which operated under the decretal Saepe.4 Nevertheless, the English court of Admiralty acquired a familiarity with negotiable instruments, insurance, charter-parties, bills of lading and other commercial business of which the common law as yet knew nothing. The other prerogative courts were less important in this connection, although the accident that most of the judges of the court of Requests were also Admiralty lawyers temporarily gave the court of Requests a certain amount of Admiralty jurisdiction by delegation from the Council. Chancery was principally concerned with partnership (for it had facilities for investigating accounts) and bankruptcy.

STATUTORY JURISDICTIONS

In the middle ages opinion was not altogether satisfied with Admiralty. In 1390 and 1391 statutes used strong language in criticism of it and restricted its powers;1 in 1450 and 1453 portions of its work were transferred to Chancery;2 not until the Tudors did Admiralty, like the navy itself, come into its own. From Henry VIII’s reign onwards the admiral’s commission empowered him to hear matters of shipping contracts, and of contracts to be performed beyond the seas, or made beyond the seas, the statutes notwithstanding.3 A remarkable act of 1536 inaugurated the new policy of strengthening Admiralty by confirming its jurisdiction over crime committed on the seas, and permitting trial by jury; the reason given is that the civil law of proof by confession or witnesses is practically impossible under the circumstances without torture, for witnesses are unobtainable.4 Shortly afterwards, another statute confirmed and enlarged its civil jurisdiction.5 There was also a tendency, however, to place a few mercantile matters under the jurisdiction of a special statutory court; thus the recorder of London, two civilians, two common lawyers and eight merchants were set up as a summary court for insurance matters6 in 1601.

ATTACKS BY THE COMMON LAWYERS

As soon as mercantile and maritime jurisdiction seemed desirable, the common lawyers began to covet it. The local courts felt the attack first. Fair courts were being hampered both by statute and by decision even in the fifteenth century;7 in the sixteenth, the local maritime courts waged a losing fight with Admiralty,1 and in the late sixteenth century Admiralty itself came into conflict with the courts of common law.

At the close of the fifteenth and the beginning of the sixteenth centuries we had in England a Reception of the Italian mercantile law; and yet, a century later, in the first years of the seventeenth century, Coke asserted that “the law merchant is part of the law of this realm”.2 This Reception was effected largely through the prerogative courts. Italian influence had always been strong in English finance, and when the revival of Roman law spread over Europe in the sixteenth century the Mediterranean mercantile customs, together with their civilian and canonist aspects, accompanied it. This Reception was general in northern Europe, and it was obviously prudent that England should follow suit, if, as the Tudors always maintained, England was to develop its pace in European trade. The prerogative courts, therefore, contained a strong element of foreign-taught civilians, whose activities were never welcomed by practitioners of the native system. The common law judges were frequently present at conferences, and this may have tempted the common lawyers to try to acquire this jurisdiction for themselves; when Coke came to the bench he deliberately set himself to cripple the court of Admiralty and to capture mercantile law for the common lawyers. Prohibitions were constantly issued to the Admiralty and other mercantile courts, while by a daring fiction which begins to appear frequently in the sixteenth century the common law courts assumed jurisdiction over acts which took place abroad, by the simple device of describing the place as being “in the parish of St Mary-le-Bow in the ward of Cheap”. This allegation was not traversable. In this way the common law began to capture the field of mercantile affairs, but for a long time it regarded itself as administering a strange and foreign law. It viewed the matter from the standpoint of custom; it was prepared to apply mercantile custom when that custom had been proved. Each case, therefore, had to allege the existence of a mercantile custom and then establish it by a jury of merchants.3

Admiralty did not submit without a struggle. They secured a conference with the common law judges in which the position was defined and a few concessions made to Admiralty,4 in 1575. When Coke came to the bench in 1606 he denied that the agreement was ever ratified, and renewed the conflict with much bitterness. It was, of course, the mercantile community which suffered through the attachments, contempts, prohibitions, writs of corpus cum causa and the rest; whichever court he sued in the other was powerful enough to frustrate him and prevent its rival from doing justice; and the common law courts were clearly incapable of doing anything in a large proportion of mercantile cases.1 Ambassadors protested, and finally another conference and another settlement (also in favour of the Admiralty) was effected in 1632. Like that of 1575 it was not observed, and the conflict continued through the Commonwealth, was renewed at the Restoration, and dragged on until the nineteenth century reconstituted Admiralty jurisdiction.

Meanwhile, the claim of the common law courts to rival some at least of the law of the Admiralty was being made good. What was merely a claim when Coke made it, became something more in the hands of Holt a century later, for by the close of the seventeenth century the constant repetition of finding mercantile custom in each case that arose was seen to be unnecessary, and the courts began to take notice of some of the more notable mercantile customs without requiring proof of them, and this policy was finally adopted as a general practice by Lord Mansfield.2 In this way the common law set out to rediscover principles of commercial law which were known to the Admiralty judges several generations earlier, and to fit them into its framework of historical forms—which fortunately was a little more flexible in the eighteenth than in the seventeenth century.

THE CONTENT OF EARLY LAW MERCHANT

We must now consider the law which these local mercantile authorities administered. They exercised a very wide power of regulation—and the middle ages thoroughly believed in the public regulation of every sort of activity. The only restrictions imposed upon them were the law of the city authorities which must not be contravened, a general requirement of reasonableness, and a restriction to purely mercantile matters.

Besides developing law and applying discipline to members of the estate of merchants, there were also matters of a diplomatic character which the consuls undertook. Treaties and commercial conventions with other communities were frequently negotiated, while down to the fourteenth century they were frequently engaged in reprisals. This meant that if a merchant was unable to obtain justice against a foreigner in the foreigner’s court, then his own government would authorise him to recoup himself out of the property of any merchant of the foreign jurisdiction in question whom he could find. The foreigner was then left to take the matter up with his own government if he could. This system was, of course, extremely inconvenient. Nevertheless it was widespread; even in England we find different cities taking reprisals against one another, justifying it on the custom of merchants.3 By the fourteenth century reprisals became much more rare.

If we turn to the development of mercantile law in England, we find that by the end of the fifteenth century the English mercantile courts had developed a few principles, and from the occasional records which survive we can see how they worked in practice. The courts of the fairs in England show us numerous actions upon contracts of sale which had been concluded by the typically mercantile form of the payment of earnest money or God’s penny.1 Warranties of quality were enforced if express (as at common law);2 and warranties of title were not yet presumed. The defence of innocent purchase for value in an open market was certainly good against a criminal charge of theft, but it was only at the close of the fifteenth century that it gave a good title to the purchaser against the original owner; this rule was virtually reached by 1473 and was settled a century later.3Caveat emptor had already become a policy of the law.4 We also find that impeding a sale gave rise to an action in tort; some simple cases on partnership appear; brokers figure prominently both as binding their principals in contract and also as suing for their fees and commission—and in this last connection lawyers are on the same footing. And finally the merchant courts imposed a heavier liability both in contract and in tort than did the common law upon masters in respect of their servants’ acts.

BONDS AND PROMISES TO PAY

A few brief words may now be said upon the content of this Italian law merchant which the English courts received, and first as to bills of exchange. All through the middle ages attempts were being made to make debts assignable and if possible payable to anyone who was the bearer of a document.5 The principle was widespread; in the year 771 a monk gave to a church, “or the bearer of this document”, the right of avenging his death and collecting the wer if he were murdered; in 1036 a man left by his will the guardianship of his wife to two relatives “or to whoever shall bear this writing”. In mercantile affairs this device became a common feature of sealed promises to pay. They were first drawn in favour of a named payee “or his attorney”, and in such cases a formal deed of attorney would be necessary to entitle anyone except the payee to sue upon the instrument. Documents of this type were common in the thirteenth and fourteenth centuries, for in fact they were simply the bond under seal which figures in countless actions of debt. Debtors were careful not to pay even an attorney except in return for the original bond, for payment was no defence if the creditor still held the sacred document.1 It therefore naturally followed that a debtor was safe in paying anyone who returned him his deed. Later still, therefore, the mere production of the document was accepted as sufficient authority entitling the bearer to sue, at first in the name of the payee, and later in his own name. In the fifteenth century the validity of written promises to pay made out in this form was questioned, save in the single instance where the bearer was the properly constituted attorney of the payee. We therefore find the appearance of a new, brief and unsealed “bill”, written and signed by the debtor, payable to the creditor or bearer. This was a substitute for the bond under seal, and for centuries had no standing in the common law.

BILLS OF EXCHANGE

The future lay rather in the development of “exchange” than in the promise to pay or the “writing obligatory”.3 “Exchange” was at first the simple process of changing coins of one currency against those of another, but there soon grew up an organisation of international bankers having agents or correspondents in the principal commercial centres, and these firms, instead of actually delivering coins of one type in exchange for coins of another, would write a letter of exchange to their correspondents, effecting the transfer purely on paper. With an international organisation they quickly realised that the transfer of money between various countries could be effected by merely transferring balances, setting off a credit balance in one country against a debit balance in another. A merchant who wished to remit money abroad would therefore address himself most usually to one of these bankers. The remitter A. therefore secures from his banker B. (in exchange for money paid to him) a bill drawn in foreign currency by B. upon C., payable to D. B. and C. are very often partners or agents of the same international bank. Under the ordinary form this arrangement would be embodied in a formal deed. Already in the fourteenth century, however, the formal deed began to be replaced by the informal letter of advice which accompanied it; it is this letter of advice which eventually grew into the modern bill of exchange.1

So far we have a document which enables A. to effect a payment to D. in a foreign country without transporting money, but this document is payable to D. only, and is in no sense transferable. Late in the sixteenth century the habit grew up in Italy of drawing bills of exchange in favour of a payee or order, whereupon the payee would endorse the bill with an order to pay X. as agent of the payee. This was one step further in the development of transferability, but X. was still unable to transfer further. The payee’s order was X., and not any other person whom X. might name.

In the middle of the seventeenth century it became established that one endorsee can endorse over, and so bills become assignable by successive endorsement; but the theory still prevailed that an endorsee was agent of the payee. However, the fact that the endorsement and delivery served instead of a power of attorney, and gave the endorsee the right to sue, made it look as though the endorsee sued in his own name—and so the lawyers compromised by calling him an agent although in respect of his own property (procurator in rem suam).

At the same time—in the middle of the seventeenth century—lawyers began to make certain presumptions in connection with bills of exchange, notably that an acceptance was for value. Having once begun to make presumptions it was easy to carry the process further; a further presumption was made that the bill was in good order (omnia rite acta), and this presumption could not be rebutted so long as the holder took in good faith, the result being that a bona fide holder for value was protected against prior irregularities. By this time the wave of academic enthusiasm for the letter of classical Roman law had spent its force, and the bill of exchange became finally established in substantially its modern form, and with the modern characteristic of negotiability.2

BILLS OF EXCHANGE IN ENGLAND

The history of bills of exchange in English law is the history first of the reception of Italian practice among English merchants in the fifteenth and sixteenth centuries. As Professor Postan suggests, there is no need to assume that England was deeply touched by the juridical controversies which Brunner1 stressed. The reception of the bill of exchange in English mercantile practice is easiest explained by more practical considerations. The bill was par excellence a device for international exchange, and that was the service which Italian international banks were rendering to the English wool trade. Hence the early familiarity of the bill of exchange. The progress of this reception can be traced by noting the changes which appear upon comparing the treatise of Marius (1651) with that of Malynes which appeared in 1622. In the interval between these two works it is clear that great developments took place in English mercantile practice, which now follows closely the stages of continental development. In England, as on the continent, we see the sixteenth-century writing obligatory drawn to bearer—and it was often the custom to draw it in blank, leaving the payee’s name to be inserted later. This was superseded in the middle of the century2 by the true bill of exchange, and upon this we have a fair amount of information in the records of the court of Admiralty, which concerned itself with these documents. Malynes shows us the old four-party bill which we have described, which was not yet payable to order or bearer. Marius shows us the three-party bill in its modern form which was transferable, and also available for internal as well as in foreign trade—for there had long been doubts whether a bill of exchange could be used in domestic commerce.

By the middle of the sixteenth century, therefore, English merchants were accustomed to the use of the continental bill of exchange3 as it then existed, and if litigation arose there was the court of Admiralty in which to sue. From time to time, however, attempts were made to sue at common law upon bills of exchange, using the action of assumpsit. The books of entries of the second half of the sixteenth century contain pleadings for this purpose, and in 1602 we find the first reported case of assumpsit being brought on a bill.4 The early forms show that there was some difficulty in pleading a bill of exchange in terms of the common law. Matters were soon greatly simplified by merely stating the facts of acceptance, endorsement and so on, and then resting the case upon the custom of merchants. In this way there was no need to express in terms known to the common law the rights and liabilities of all parties to a bill. This practice becomes general from 1612 onwards.5 The next step logically followed; once the common law courts were familiar with the nature of a bill of exchange, it was no longer necessary to plead specially the custom of merchants. This great change was largely due to Lord Holt. During the period when he sat as Chief Justice of the King’s Bench we find that the negotiability of bills of exchange was recognised at common law. His decisions laid it down that a bill drawn to order could be transferred by endorsement, that the title of a bona fide holder was not invalidated by defects in the title of his transferor, and that consideration will be presumed.

PROMISSORY NOTES

In the seventeenth century merchants did not draw a very sharp distinction between bills of exchange and the old informal and unsealed writing obligatory,1 which now became simplified in form as a promissory note. In mercantile practice they negotiated notes in the same way as bills, but, as we have seen, the “writing” was a very old form, and therefore associated in men’s minds with very old law, and the common lawyers, like the civilians, had technical reasons for holding that promises to pay were not transferable save to attorneys. Lord Holt refused to recognise the promissory note as being on the same footing as a bill of exchange in the famous case of Buller v. Crips.2 Holt’s view was that these promissory notes were a novelty invented by the goldsmiths, whose practice was to accept money from their customers on deposit, giving in return a promissory note which they thought was negotiable.3 The goldsmiths were doing, in a less convenient way, what a modern bank does in accepting a customer’s money, only to-day, instead of always issuing notes, the bank undertakes to honour its customer’s cheques. In so far as promissory notes were used in this operation Holt maintained that they represented an attempt by Lombard Street to dictate law to Westminster Hall. There was also a good deal of technical force in Holt’s argument that the same result could be obtained through a bill, and that while the bill of exchange had a proper place in the common law, the promissory note had not. He therefore refused to allow an endorsee to sue on a promissory note. Nevertheless mercantile opinion in favour of notes was so strong that a statute was passed expressly making them negotiable.4

At this point we reach the beginning rather than the end of the story. Future development lay in the direction of elaborating the idea of negotiability and applying it to a great variety of documents, some of them of very recent origin. Although a number of negotiable instruments have arisen in modern times, yet the really fundamental idea of negotiability was established in the seventeenth century, and the greatness of that achievement can only be appreciated with reference to the vast modern developments which it made possible.

Space forbids more than mention of the many other contributions which the custom of merchants made. Insurance has a long and interesting history,1 at first maritime and then general; so, too, has the law of partnership,2 of which many varieties were known during the middle ages, enabling large international banks and financial houses to conduct their operations, while in the seventeenth century the partnership or company is expanded into the trading corporation.3 The law of agency is especially interesting for its mingling of common law, ecclesiastical ideas on the management of monasteries, and mercantile practice.4

PART 5

EQUITY

[1]For an excellent general survey, see Wigmore, Panorama of the World’s Legal Systems, ii. 875-929; for more detail, see Holdsworth, v. 60-154: the most complete work in English is Sanborn, Origins of the Early English Maritime and Commercial Law, which is a good introduction to the continental literature; cf. Sanborn, “Maritime Law”, Encyclopedia of Social Sciences, x. 122.

[2]Only a slight fragment has survived, in Dig. xiv. 2, 1.

[1]Edited, with a long introduction, by Ashburner, Rhodian Sea Law; it is possibly a century earlier than the Basilica. Cf. F. H. Lawson, The Basilica, Law Quarterly Review, xlvi. 486, xlvii. 536.

[2]Modern historians put them three centuries later.

[3]Edited by Sir H. Travers Twiss (Rolls Series).

[4]Edited by P. Studer (1910).

[5]Edited by F. B. Bickley (1900).

[6]Descriptions and extracts of all these will be found in Sanborn, op. cit.

[7]In England this mercantile custom is easily traced in the Borough Customs, edited by Mary Bateson for the Selden Society.

[1]Cf. above, pp. 304-305.

[2]Printed as Munimenta Gildhallae (ed. Ryley, Rolls Series).

[3]Edited by Sir Travers Twiss in the Rolls Series.

[4]Edited by Dr A. H. Thomas, Plea and Memoranda Rolls.

[5]Select Cases in Law Merchant (ed. Gross, Selden Society).

[1]Markets and fairs were franchises, operated primarily for the profit of the owners. For specimen proceedings of English fairs and piepowder courts, see Select Cases in Law Merchant (ed. Gross, Selden Society).

[2]Statute of Staples (1353), 27 Edw. III, st. 2, consolidating earlier enactments; the policy was to force all foreign trade to pass through these monopolistic organisations, largely to simplify customs control.

[3]For a thorough study of this remarkable league of ports see K. M. E. Murray Constitutional History of the Cinque Ports (Manchester, 1935).

[1]Holdsworth, i. 544 ff.

[2]This case was discovered by Mr Charles Johnson and printed in the Camden Miscellany, vol. xv (1929). For a collection of early material, see Select Cases in Admiralty (ed. Marsden), 2 vols., Selden Society.

[3]Sayles, King’s Bench, iii. pp. lxxxvii, cxxv; Magna Carta (1225), c. 11; cf. Articuli super Cartas (1300), 28 Edward I, c. 3.

[4]Above, p. 305.

[1]13 Rich. II, st. 1, c. 5; 15 Rich. II, c. 3.

[2]29 Hen. VI, c. 2; 31 Hen. VI, c. 4.

[3]Holdsworth, i. 549 n. 7; cf. the commission of 1618 in Prothero, Statutes and Documents 388 at 391.

[4]28 Hen. VIII, c. 15. The act was followed by a sharp rise in the number of convictions. But if witnesses were unobtainable, how did the juries reach their verdicts? The trials were to be before commissioners, of whom the admiral might be one. Later on, the commission was filled by common lawyers.

[5]32 Hen. VIII, c. 14.

[6]43 Eliz. c. 12.

[7]Holdsworth, i. 539.

[1]Holdsworth, i. 531.

[2]Co. Lit., 182.

[3]For an early example (1292) see Sayles, King’s Bench, ii. 69-72.