This ancient phrase has been defined as synonymous with the law of merchants. It is rather the system of law which the courts of England and the United States apply to mercantile contracts. It is a branch of the common law, inferior in importance to no other, and in many respects quite distinct from any other. The principal subjects embraced within it are the law of shipping, including that of marine insurance; the law of negotiable bills of exchange and promissory notes; and the law of sales; all of which topics are treated of in this work specifically. - The law merchant has grown up gradually, and, during the larger part of its existence, slowly. It originated undoubtedly in the customs of merchants. That it stands out in English law more prominently and distinctly than in any other general system of municipal law, may. be reasonably ascribed to the greater extent of the commerce of England for many ages. In the earliest records we have distinct intimations that questions in relation to the interests and contracts of merchants came not unfre-quently.before the courts; and that these questions were decided even then by a reference to the customs of merchants. In doing this the courts only obeyed a necessity, which was felt wherever commerce existed and was respected.
It is not to be concealed, however, that the courts did this with some reluctance, and by steps which followed each other only at long distances. The reasons for this are obvious, and may be discerned the more easily because they have not yet ceased wholly to operate. The common law was, at a very early period, a complicated but well arranged and exceedingly systematic body of law. To know this was the privilege of a few; to administer it gave wealth and dignity to a very few. The law was then a monopoly, and one of very great value, and it was guarded carefully by those who possessed it. But merchants were compelled to find, or to invent, for the various exigencies of their commerce, rules and principles different from those which had grown out of the feudal system, and were intended mainly to govern titles to land and the relations of feudal rank. When these mercantile contracts came before the courts, the same necessity which had led merchants to find and introduce their new rules, acted upon the courts, and induced the courts, more or less willingly, to accept these rules as their rules also, and thus to make them law.
But while some of these rules were only modifications of the existing rules of the common law, others of them were very distinct exceptions, and some were positive contradictions. It was perhaps wise in the courts to regard with jealousy rules of law made by no sovereign authority, and neither evidenced nor promulgated in any authentic way; and indeed at all times the established rules which governed the business and the contracts of any set of men must have been recognized as law; and even the Roman civil law acknowledged the binding force of mercantile usage as constituting law. One instance (Digest, L. 14, tit. 2, sec. 9) will show this regard to usage. In the reign of the emperor Antoninus a vessel had been wrecked; a part of her cargo had been thrown over to lighten her, and by this loss the vessel and the remainder of the cargo were saved, and the owner of the property demanded a contribution from the others. Many centuries before this time the merchants and navigators of the Mediterranean had formed a code of laws for their own government, and as it was agreed upon at and promulgated from the island of Rhodes, then a principal centre of commerce, it was known as the Rhodian law.
By this law, the claimant would be entitled to contribution under a principle which has come down to our own times, and is now in full force under the name of general average. The claim of the owner of the property lost was submitted to the emperor, and the rescript, or decree, was as follows: "I, indeed, am lord of the earth; but the law (or this law) is the lord of the sea. Whatever the Rhodian law prescribes in the premises, let that be adjudged." The very next rubric makes the ship owner responsible for the acts of the master of his ship. Another (Dig. 4, 9) provides that mariners and certain others shall be responsible for all property committed to their charge. Another (Dig. 22, 2; Code, 4, 33) gives rules which are quite the same with those that regulate at this day loans on bottomry and respondentia. And another (Dig. 47, 9) provides that fourfold damages should be paid by the plunderer of a vessel in distress. These provisions of the Roman law, with the remains of the law of Rhodes, sufficed for the purposes of commerce until about eight centuries since, when the Consolato del mare was promulgated. It is an excellently constructed system, constantly referred to by law writers of continental Europe at this day, and in some instances mentioned by English and American judges.
The origin of this code is not certainly known, nor the name of its authors, nor the time or place of its original promulgation. Next to the Consalato in time, according to the best authorities, came the "Laws of Oleron." We know that these were collected, reduced to systematic form, and published, as the rules then in force for the regulation of shipping, in the small island of Oleron, off the coast of France. Queen Eleanor was duchess of the province of Gui-enne, near which Oleron lies, and French writers assert that she caused the preparation and publication of this code. English antiquaries refer it to her son Richard I. But no one certainly knows who was their author, or when they were first in force. This code has been repeatedly published in English, and is most accessible to American students in the first volume of Peters's "Admiralty Reports." Then followed the "Laws of Wisby." This was the name of a convenient port on the W. coast of Gothland, an island in the Baltic, about equidistant from Sweden, Russia, and Germany, and once the emporium of a great commerce. These laws were probably founded upon the laws of Oleron, with which they frequently coincide.
A French work called Le guidon, and often referred to under that name (the author being unknown), was published about three centuries since. Its whole title, translated into English, is: "A Useful and Necessary Guide to them who deal in Merchandise and send it to Sea." And then we reach the Ordonnance de la marine of Louis XIV., published in 1681. It covers the whole ground of maritime law, including insurance. It codifies and systematizes with great skill all existing provisions, whether they were derived from enactment or from usage, and in many instances improves upon them. Chancellor Kent calls this ordinance "a monument of the wisdom of his reign, far more durable and more glorious than all the military trophies won by the valor of his armies." - Passing now over to England, we find even in Magna Charta (1215) a section running thus: " All merchants shall have safe and secure conduct to go out of and to come into England and to stay there, and to pass as well by land as by water, to buy and sell by the ancient and allowed customs, without any heavy tolls, except in time of war, or when they shall be of any nation at war with us." And the next section defines the rights of alien merchants in time of war.
In subsequent reigns, and especially in those of the Edwards, various statutes were passed, expressly de mer-catoribus, and in most instances securing to them valuable privileges. Such enactments were from time to time repeated, as they are to this day. And the struggle of the courts, and still more of members of the legal profession, to prevent this invasion of the law, is very remarkable. Thus a question early grew up whether " the custom of merchants " was to be regarded as a custom of certain places, differing in one of them from that which it was in others, or as a part of the general law of the realm. After some intimations in favor of the latter view, in 1622 (Winch's Reports, 24) Lord Chief Justice Hobart declared that " the custom of merchants is a part of the law of this realm;" and Coke, in both the 1st and 2d Institutes, declares that " the lex mercatoria is part of the laws of the realm." So this question seems to have been finally disposed of. Not so easy was it however to determine, finally and practically, another question which had also arisen.
When it was determined that the custom of merchants had become the law merchant, and therefore must be applied to all mercantile contracts between parties who were merchants, it was now asked whether the same law should be applied to the construction and enforcement of the same contracts when they were made between parties who were not merchants. That the law merchant should be confined to persons who were merchants was at first held by the courts (Cro. Jac, 306, A. I). 1613), in a case where the drawee and acceptor of a bill of exchange was sued on his acceptance, and the defendant prevailed, on the grounds that only a merchant would be held on such acceptance, and that it did not appear that the defendant was a merchant at the time when he accepted the bill. In another case occurring 19 years afterward, the same doctrine was held. But in two years more the court had got so far that, the defendant being called a merchant, they held that they would intend that he was a merchant at the time; and 22 years afterward the court in a similar case decided the whole question by declaring that "the custom is good enough generally for any man without naming him merchant." From this doctrine the courts never afterward swerved, though the point continued to be repeatedly raised in argument, and it was not till 1765 that Lord Mansfield finally declared: "The law of merchants and the law of the land .is the same.
A witness cannot be admitted to prove the law of merchants. We must consider it as a point of law." The importance of this rule depends upon the difference in law between a custom which is so general that it has the force of law, and one which applies only to a contract made under it because it is to be considered as a part of that contract. This distinction is not merely technical, for it rests upon the most substantial foundations. If two men enter into a contract which relates to some certain subject matter, and upon this an action of law begins which can be determined only by a construction of the contract, one of the parties may insist that it shall be construed in a certain way, because a custom exists in reference to that subject matter and that kind of contract, which gives it that meaning and effect. But, to make out this case, he must prove that this custom not only exists, but is so general, so old and well established, and so widely known and recognized, that a jury may believe as a matter of fact that the custom was in the minds of the parties at the time they made their contract, and that they made it in conformity with custom. Very many cases have been decided on this ground.
Thus, in England, a party agreeing to leave in a warren 10,000 rabbits, was held bound to leave there 12,000, because it was proved to the satisfaction of the jury that, as to rabbits, and in that neighborhood, the words one thousand meant 1,200. (3 Barn, and Adol., 728.) So in New York, where one promised to pay 12 shillings per day for every man employed in a certain business, and some of the men worked 12 1/2 hours within the 24, it was held that the employer must pay 15 shillings for such a day, because a custom was shown, applicable to that kind of work, of considering 10 hours in 24 a day's work. (5 Hill, 437.) But it is a very different thing when the question is whether a custom exists, so general as to be a part of the law of the land. Thus, a man promises, by his note in writing dated Jan. 1, to pay to some one $1,000 in three months from date. The general law says that the money must be paid on the 1st of April. But a custom comes in, which has, after ages of general acknowledgment and practice, acquired the force of law, and this custom adds three days to the three months, and the money is not due until the 4th of April. And then another custom comes in, which by the same means has acquired the same force, and the effect of this is, that if the 4th of April falls on Sunday or any legal holiday, the money is due on the 3d. The practical difference between these two things is this.
In the two cases cited of the rabbits and the days' work, whoever relied upon the custom was bound to prove conclusively to the jury its existence and recognition, as a matter of fact; and if it were so proved, the court would instruct the jury as to the legal effect of the fact thus proved. This legal effect would be only that these two persons would be bound by the construction put upon the words by the custom under which they used the words, in the same way in which they would be bound if they had expressly defined those words as having that meaning. But in the other case, no proof would be offered to the jury, nor would the court permit them to listen to any evidence about it. The only question would be, what is the law, not for this bargain only, or for these parties only, but for all parties and in reference to all similar bargains ? But it is the duty of the court to know the law, and it is their exclusive function to determine the law, and to declare it to the jury, whose duty it is, in civil cases certainly, to receive and obey the instructions given to them.
But then it may be asked, how could this law merchant, which is by theory a mass or system of these customs, become known to the courts ? None of these laws or rules were ever enacted, except, in some instances, after they had acquired the force of law, and it was thought desirable to give them more precision and uniformity. Of few of them is the origin known, either as to time, or parentage, or authority. How then came they to be law ? The answer is not difficult if we keep in mind the distinction between a question of fact and a question of law. For the want of remembering this distinction, there is a seeming antagonism in the cases on this subject. Thus, in 1760 the court of king's bench said: "The custom of merchants is part of the law of England; ... if there be a doubt about the custom, it may be fit and proper to take the opinions of merchants thereon." And in 1765 Lord Mansfield, chief justice, says: "A witness cannot be admitted to prove the law of merchants." But the contradiction between these two principles is apparent only, and both of them are unquestionably sound. Mansfield means that no witness can be admitted to prove to a jury what the law merchant is; it can no more be allowed than it would be to prove in this way the law of real estate or any other branch of law.
But if the court are themselves uncertain as to what the law merchant is, they will hear evidence, authority, and argument upon the subject, and ascertain the existence or character of the customs which compose it, as well as they can. Lord Mansfield was in the constant habit of ascertaining from "the city," as the phrase was then, or from "the Trinity house" (a board consisting of eminent merchants), what their customs were; and it was by these means that he laid the foundations, to say no more, of some of the most important departments of the law merchant. And now both in England and the United States it is perfectly well understood that the courts will hear arguments and listen to citations of competent and pertinent authority upon any question of the law merchant, precisely as upon any other question of the law of the land. But when they decide that any rule enters into and forms a part of the law merchant, it has exactly the same force as any other rule of law.