to be due from the defendant to the plaintiff, on an action or suit at law; this is a contract of the highest nature, being established by the sentence of a court of judicature. Debts upon recognizance are also a sum of momey, recognized or acknowledged to be due to the crown or a subject, in the presence of some court or magistrate, with a condition that such acknowledgment shall be void upon the appearance of the party, his good behaviour, or the like: and these, together with statutes merchant and statutes staple, &c. if forfeited by non-performance of the condition, are also ranked among this first and principal class of debts, viz. debts of record; since the contract, on which they are founded, is witnessed by the highest kind of evidence, viz. by matter of record. Debts by specialty, or special contract," are such whereby a sum of money becomes, or is acknowledged to be, due by deed or instrument under nant on such a deed. 3 & 4 W. & M. c. 14. Bac. Ab. Heir, F. 1 P. Wms. 99. 7 East, 128 Whereas a simple contract creditor has no remedy at law in any case against the real estate of his deceased debtor, though in some cases by marshalling the assets, 3 Wooddes. 488.; or where the debtor died a trader, relief may be obtained in equity; 47 Geo. III. sess. 2. c. 74. 6thly. That a deed is entitled to preference, except as to rent due on a parol demise, over simple con tract debts, in the course of payment of a testator's debts, supra 465. Toller, 1st ed. 221. 5 T. R. 307.; and though this rule does not obtain in case of bankruptcy, where all creditors receive a dividend pari passu, yet by means of a mortgage and some other deeds, some specifie security may frequently be obtained, or right to prove acquired, which even in that event, places one creditor in a better situation than he would otherwise have been. 7thly. That a deed is not affected by the statute of limitations, which renders it necessary for a simple contract creditor to proceed within six years after his cause of action accrued. Cowp. 109. i Saund. 57, 8. 21 Jac. 1. c. 16. Tidd, 6th edit. 19. 8thly. That in pleading a deed it is in general necessary to make a profert, as it is technically termed, of the deed, or to state upon the record some excuse for the omission. 10 Co. 92. b. 1 Chitty's Plead. 351. 3 T. R. 151. 4 East, 585. 9thly. That in case of a deed when a profert is necessary, the other party is entitled to oyer and copy, 1 Saund. 9. a. 1. a right which does not in general exist in case of simple contracts. Tidd, 6th edit. 618, 9. 10thly. That if a deed be given expressly to secure a pre-existing simple contract debt, due from the ob ligor, it will at law merge the latter, and prevent him from suing upon the same, 3 East, 258, 9. Cro. Car. 415.; though if the deed be given as a collateral security, or by a third party, it will not have that operation. 3 East, 251. Com. Dig. Accord. 6 Term Rep. 176, 7. 2 Leon. 110. Debts or contracts of record, being as we have seen, sanctioned in their creation, by some court or magistrate, having competent jurisdiction, have certain particular properties distinguishing them as well from simple contracts as from specialties. 1st. These debts or contracts cannot in pleading be impeached or affected by any supposed defect or illegality in the transaction on which they are founded, and if a judgment be erroneous, that circumstance will afford no answer to an action of debt upon it, and the only course for the defendant is to reverse it by writ of error, 2 Burr. 1005. 4 East, 311. 2 Lev. 161. Gilb. on U. & T. 109. Gilb. Debt, 412. Yelv. 155. Tidd, 6th ed. 1152.; and though third persons, who have been defrauded by a collusive judgment, may shew such fraud, so as to prevent themselves from being prejudiced by it, 13 Eliz. c. 5. 2 Marsh. 392. 7 Taunt. 97. the parties to such judgment are estopped at law, from pleading such a plea, and must in general apply for relief to a court of equity. 13 Eliz. c. 5. 2 Marsh. 392. 7 Taunt. 97. 1 Anstr. 8. There is however one instance in which a party may apply to the common law court to set the judgment aside, viz. where it has been signed upon a warrant of attorney, given upon an unlawful consideration, or obtained by fraud, in which case, as this is a peculiar instrument, affording the defendant no opportunity to resist the claim by pleading, and frequently given by persons in distressed circumstances, the court will afford relief under a summary application, Dougl. 196. Cowp. 727. 1 Hen. Bla. 75. Semble; not so in Exchequer. 1 Anstr. 7, 8. Another peculiar property of a contract of record is, that its existence, if disputed, must be tried by inspection of the record, entry of recognizance, &c. and not by a jury of the country. Tidd, 6th edit. 797, 8. But notwithstanding, since the act of union, an Irish judgment is a record, yet it is only proveable by an examined copy on oath, and therefore it is only triable by a jury. 5 East, 473. Another quality, and one of the most important, is, that a judgment when docketted, binds the land as against subsequent purchasers, Tidd, 6th edit. 966, 7.; and such a judgment and recognizance is entitled to preference to a specialty and other debts of an inferior nature. 6 T. R. 384. Tidd, 6th edit. 967. Lastly, if a judgment be obtained expressly for a simple contract or specialty debt, and not as a collateral security, the inferior demand is merged, according to the rule transit in rem judicatam, but if the judgment were obtained merely as a collateral security, the creditor retains an election to proceed either on the judgment or inferior security. 3 East, 258. Chitty (39) As to deeds in general, their requisites and parts, and distinctions between them and simple contracts, see ante 295 to 310.; ante 465, note 38. a. and Com. Dig. title, Fait E seal. Such as by deed of covenant, by deed of sale, by lease reserving rent, or by bond or obligation: which last we took occasion to explain in the twentieth chapter of the present book; and then shewed that it is a creation or acknowledgment of a debt from the obligor to the obligee, unless the obligor performs a condition thereunto usually annexed, as the payment of rent or money borrowed, the observance of a covenant, and the like; on failure of which the bond becomes forfeited and the debt becomes due in law. These are looked upon as the next class of debts after those of record, being confirmed by special evidence, under seal. Debts by simple contract arc such, where the contract upon which the obligation arises is neither ascertained by matter of record, nor yet by deed or special instrument, but by mere oral evidence, the most simple of any; or by notes unsealed, which are capable of a more easy proof, and (therefore only) better, than a verbal promise. It is easy to see [466] into what a vast variety of obligations this last class may be branched out, through the numerous contracts for money, which are not only expressed by the parties, but virtually implied in law. Some of these we have already occasionally hinted at: and the rest, to avoid repetition, must be referred to those particular heads in the third book of these Commentaries, where the breach of such contracts will be considered. I shall only observe at present, that by the statute 29 Car. II. c. 3. no executor or administrator shall be charged upon any special promise to answer damages out of his own estate, and no person shall be charged upon any promise to answer for the debt or default of another, or upon any agreement in consideration of marriage, or upon any contract or sale of any real estate, or upon any agreement that is not to be performed within one year from the making; unless the agreement or some memorandum thereof be in writing, and signed by the party himself, or by his authority. 40 But there is one species of debts upon simple contract, which, being a transaction now introduced into all sorts of civil life, under the name of paper credit, deserves a more particular regard. These are debts by bills of exchange, and promissory notes. A bill of exchange" is a security, originally invented among merchants in different countries, for the more easy remittance of money from the one to the other, which has since spread itself into almost all pecuniary transactions. It is an open letter of request from one man to another, desiring him to pay a sum named therein to a third person on his account; by which means a man at the most distant part of the world may have money remitted to him from any trading country. If A. lives in Jamaica, and owes B., who lives in England, 1000., now if C. be going from England to Jamaica, he may pay B. this 10007, and take a bill of exchange drawn by B. in England upon A. in Jamaica, and receive it when he comes thither. Thus does B. receive his debt, at any distance of place, by transferring it to C.; who carries over his money in paper credit, without danger of robbery or loss. This method is said to have been brought into general use by [467] the Jews and Lombards, when banished for their usury and other vices; in order the more easily to draw their effects out of France and England into those countries in which they had chosen to reside. But the invention of it was a little earlier; for the Jews were banished out of Guienne in 1287, (40) See 3 Book, page 159. (41) See Bayley on Bills, and Chitty on Bills, per tot. The subject is so very slightly commented on in the text, that it will be essential to the student to look into the works referred to in order to obtain a complete knowledge of the subject. and out of England in 1290; (r) and in 1236 the use of paper credit was introduced into the Mogul empire in China. (s) In common speech such a bill is frequently called a draft, but a bill of exchange is the more legal as well as mercantile expression. The person, however, who writes this letter, is called in law the drawer, and he to whom it is written the drawee; and the third person, or negotiator, to whom it is payable (whether especially named, or the bearer generally) is called the payee. eye These bills are either foreign or inland; foreign, when drawn by a merchant residing abroad upon his correspondent in England, or vice versa; and inland, when both the drawer and the drawee reside within the king. dom. Formerly foreign bills of exchange were much more regarded in the of the law than inland ones, as being thought of more public concern in the advancement of trade and commerce. But now by two statutes, the one 9 & 10,W. III. c. 17. the other 3 & 4 Ann. c. 9. inland bills of exchange are put upon the same footing as foreign ones; what was the law and custom of merchants with regard to the one, and taken notice of merely as such, (t) being by those statutes expressly enacted with regard to the other. So that now there is not in law any manner of difference between them. Promissory notes, or notes of hand, are a plain and direct engagement in writing, to pay a sum specified at the time therein limited to a person therein named, or sometimes to his order, or often to the bearer at large. These also, by the same statute 3 & 4 Ann. c. 9. are made assignable and indorsable in like manner as bills of exchange. But, by statute 15 [468] Geo. III. c. 51. all promissory or other notes, bills of exchange, drafts, and undertakings in writing, being negotiable or transferable, for the payment of less than twenty shillings, are declared to be null and void and it is made penal to utter or publish any such; they being deemed prejudicial to trade and public credit. 42 And by 17 Geo. III. c. 30. all such notes, bills, drafts, and undertakings, to the amount of twenty shillings, and less than five pounds, are subjected to many other regulations and formalities; the omission of any one of which vacates the security, and is penal to him that utters it. 43 The payee, we may observe, either of a bill of exchange or promissory note, has clearly a property vested in him (not indeed in possession but in action) by the express contract of the drawer in the case of a promissory note, and, in the case of a bill of exchange, by his implied contract, viz. that, provided the drawee does not pay the bill, the drawer will: for which reason it is usual in bills of exchange to express that the value thereof hath been received by the drawer; (u) in order to shew the consideration, pon which the implied contract of repayment arises. And this property, so vested, may be transferred and assigned from the payee to any other man; contrary to the general rule of the common law, that no chose in action is assignable which assignment is the life of paper credit. It may there r 2 Carte. Hist. Eng. 203, 206. t Roll. Abr. 6. s Mod. Un. Hist. iv. 499. u Stra. 1212. (42) The 48 Geo. III. c. 88, repeals this statute for the purpose of re-enacting the same re strictions with a more summary mode of punishing offenders. It provides that the penalty not exceeding 201. nor less than 57. shall be recoverable before a single justice of the peace, at any time within twenty days after the offence has been committed, one moiety to the offender and the other to the poor of the parish; and in default of payment, either voluntarily or by distress, the offender may be imprisoned for three months. (43) It has been the policy of the legislature to suspend this act occasionally. By the 3d Geo. IV. c. 70. it now stands suspended until the 5th day of January, 1833. 131 fore be of some use to mention a few of the principal incidents attending this transfer or assignment, in order to make it regular, and thereby to charge the drawer with the payment of the debt to other persons than those with whom he originally contracted. In the first place, then, the payee, or person to whom or whose order such bill of exchange or promissory note is payable, may by indorsement, or writing his name in dorso, or on the back of it, assign over his whole property to the bearer, or else to another person by name, either of whom is then called the indorsee; and he may assign the same to an- [469] other, and so on in infinitum. And a promissory note, payable to A. or bearer, is negotiable without any indorsement, and payment thereof may be demanded by any bearer of it. (v) But, in case of a bill of exchange, the payee, or the indorsee (whether it be a general or particular indorsement), is to go to the drawee, and offer his bill for acceptance; which acceptance (so as to charge the drawer with costs) must be in writing, under or on the back of the bill. If the drawee accepts the bill, either verbally or in writing, () he then makes himself liable to pay it; this being now a contract on his side, grounded on an acknowledgment that the drawer has effects in his hands, or at least credit sufficient to warrant the payment. If the drawee refuses to accept the bill, and it be of the value of 201. or upwards, and expressed to be for value received, the payee or indorsee may protest it for non-acceptance; which protest must be made in writing, under a copy of such bill of exchange, by some notary public; or, if no such notary be resident in the place, then by any other substantial inhabitant in the presence of two credible witnesses and notice of such protest must, within fourteen days after, be given to the drawer. : 44 But, in case such bill be accepted by the drawee, and after acceptance he fails or refuses to pay it within three days after it becomes due (which three days are called days of grace), the payee or indorsee is then to get it protested for non-payment, in the same manner, and by the same persons who are to protest it in case of non-acceptance, and such protest must also be notified, within fourteen days after, to the drawer. And he, on producing such protest, either of non-acceptance, or non-payment, is bound to make good to the payee, or indorsee, not only the amount of the said bills (which he is bound to do within a reasonable time after non-payment, without any protest, by the rules of the common law) (x), but also interest and all charges, to be computed from the time of making such protest. But if no protest be made or notified to the drawer, and any damage v 2 Show. 235.-Grant v. Vaughan. T. 4 Geo. III. B. R. w Stra. 1000. (44) With respect to acceptance and protest, the law now is, in several material points, diffe rent from the statement of it in the text. Acceptance is not necessary, though usual and desira ble on bills payable at a certain time; but when the bill is payable at a certain distance of time after sight, then acceptance is essential and should not be delayed, because (as the time for payment of the bill does not begin to run till it is accepted, 6 T. R. 212. Bayl. 112. Chitty on Bills, 268.) the responsibility of the drawer would be thereby protracted. Acceptance of an inland bill can now be in writing only on the face of the bill itself, by 1 & 2 Geo. IV. c. 78.; though formerly, as is the case still with foreign bills, it might have been verbal, or in writing on any other paper. 4 East, 67. 5 East, 514. But in all cases, whether of an inland or foreign bill, if it be presented and acceptance is refused, prompt notice (within fourteen days will not suffice, but usually the next day to the immediate indorsor, and each indorsor is allowed a day) must be given to the drawer and indorsers, or they will be discharged from responsibility. Upon nonacceptance, the holder may immediately sue the drawer, 2 Camp. 458. and indorsers, 4 East, 481. without waiting till the bill become due, according to the terms of it. No protest of an inland bill is essential to entitle the holder to recover interest and costs, and such protest now seems useless. 2 B. & A. 696. Chitty. [470] accrues by such neglect, it shall fall on the holder of the bill. The bill, when refused, must be demanded of the drawer as soon as conveniently may be for though, when one draws a bill of exchange, he subjects himself to the payment, if the person on whom it is drawn refuses either to accept or pay, yet that is with this limitation, that if the bill be not paid when due, the person to whom it is payable shall in convenient time give the drawer notice thereof; for otherwise the law will imply it paid since it would be prejudicial to commerce if a bill might rise up to charge the drawer at any distance of time when in the mean time all reckonings and accounts may be adjusted between the drawer and the drawee. (y) : If the bill be an indorsed bill, and the indorsee cannot get the drawee to discharge it, he may call upon either the drawer or the indorser, or if the bill has been negotiated through many hands, upon any of the indorsers; for each indorser is a warrantor for the payment of the bill, which is frequently taken in payment as much (or more) upon the credit of the indorser, as of the drawer. And if such indorser, so called upon, has the names of one or more indorsers prior to his own, to each of whom he is properly an indorsee, he is also at liberty to call upon any of them to make him satisfaction; and so upwards. But the first indorser has nobody to resort to, but the drawer only. 45 What has been said of bills of exchange is applicable also to promissory notes, that are indorsed over, and negotiated from one hand to another; only that, in this case, as there is no drawee, there can be no protest for non-acceptance; or rather the law considers a promissory note in the light of a bill drawn by a man upon himself, and accepted at the time of drawing. And, in case of non-payment by the drawer, the several indorsees of a promissory note have the same remedy, as upon bills of exchange, against the prior indorsers. CHAP. XXXI. OF TITLE BY BANKRUPTCY.' THE preceding chapter having treated pretty largely of the acquisition of personal property by several commercial methods, we from thence shall be easily led to take into our present consideration a tenth method of transferring property, which is that of y Salk. 127. (45) The holder of the bill may bring actions against the acceptor, drawer, and all the indorsers at the same time; but though he may obtain judgments in all the actions, yet he can recover but one satisfaction for the value of the bill; but he may sue out execution against all the rest for the costs of their respective actions. Bayley, 43. (1) The law relative to bankruptcy is entirely an innovation on the common law, first introduced by the statute of the 34 & 35 of Hen. VIII, but since totally altered and new-modelled by subsequent statutes, upon which the whole system is at present founded. In the ordinary course of law, creditors may seize either the person or the effects of their debtor, but they cannot take both at the same time; and if they take the body in execution, they cannot afterwards resort to the effects. All the creditors must run through all the same process to recover their several debts. By the bankrupt law, on the contrary, a form of proceeding, upon principles equally rational and humane, is allowed at the instance of one or more of a man's creditors, at the common |