Story Case

Albert Dawson executed the following instrument, giving it to Ernest Miller: "$200

John Huffcut, pay to my order, in sixty days, two hundred dollars, value received by you."

The instrument was not signed by Dawson, as drawer.

Miller carried this to Huffcut, who signed on the reverse side:

"Accepted by John Huffcut."

Miller then delivered the instrument to Dawson, who indorsed it to Thomas Cooley. In an action on the instrument against Huff cut should Cooley state that the suit is on a promissory note or a bill of exchange?

Ruling Court Case Number One Young Vs. Tevis, Volume 1 Met Calf's Massachusetts Reports, Page 197. Volume 71 American Decisions, Page 474

John Tevis drew a bill of exchange upon Rogers in this form: $1500. Shellybelle, August 31.

Six months after date, pay to the order of John Tevis, one thousand five hundred dollars, value received. To W. G. Rogers." It was accepted in the usual form by Rogers and indorsed in blank by Tevis. Young, who is the holder, brings this action against Tevis as indorser and against Rogers as acceptor. It was contended by way of defense, that this action could not be maintained because the instrument contained no drawer, and was, therefore, incomplete.

Decision: It is an essential element of a bill of exchange that it be signed by some one as drawer. Unless it is so signed, it is incomplete and the acceptors and indorsers are not liable thereon to a holder of the incomplete instrument.

Mr. Justice Duvall said: "Among the substantial requisites which constitute the very essence of bills of exchange as commercial securities, are the names and description of the parties to the instrument, whether as drawer or payee or drawee. For it is obvious that every bill must contain upon its face the name of the party by whom it is drawn." Judgment was given for Tevis and Rogers.

Court Case Number Two Mccall Vs. Taylor, Volume 34 Law Journal Reports, Page 365

This was a suit upon an instrument against Taylor, seeking to charge him as an acceptor of a bill of exchange. The instrument in question was in the following form, as drawn by one Milne: "£300.

Four months after date, pay to my order, the sum of three hundred pounds for value received.

To Captain Taylor, Ship 'Jasper.' " The instrument was not dated, nor was there a signature of any drawer, but Taylor had written across the face of the instrument, "Accepted, "Warren Taylor." Milne transferred this instrument to McCall, who sued upon it as a bill of exchange.

Decision: A bill of exchange, to be valid as such, must be signed by some one as drawee. But if an unsigned bill is accepted, it may be negotiated as a promissory note. The acceptance of the acceptor is considered a promise by the acceptor to pay the bill according to its tenor. The court held that an action upon this instrument as a bill of exchange could not be maintained by McCalL

Ruling Law. Story Case Answer

It is obvious that a negotiable instrument is not complete until it has been signed by the person making or drawing the same. Thus, a promissory note is incomplete, and creates no obligation, unless it is signed by the person who makes it. A bill of exchange is not valid as such unless it is signed by some person as drawer. In the Story Case, the paper given was not a bill of exchange, since Dawson did not sign as drawer. But a bill of exchange, without the name of a drawer, may become a promissory note when accepted by the drawee. The bill contains words of promise, and the signature of the drawee on the instrument makes it his promissory note. The court held in McCall vs. Taylor that if action is brought against the acceptor, as on a note, the action will be effective. This is true in the case of Young vs. Tevis. Young should have started his suit as on a note and not on a bill of exchange, because a drawer was not named. For the same reason, Cooley in the Story Case, should sue Huffcut as the maker of a note and not as the acceptor of a bill of exchange.