Bill Of Exchange, in commercial transactions, a written instrument designed to secure the payment of a distant debt without the transmission of money, being in effect a setting off or exchange of one debt against another.. This important instrument is of modern origin. It was not because its use was not perceived that it was unemployed in ancient commerce, but because its basis is mercantile integrity, which never existed till a recent period in trading communities to a sufficient extent to warrant putting money or other valuable commodities at risk upon so frail a security. Thus we have evidence in the case of the Athenian banker which is the subject of one of the dis-courses of Isocrates, that the convenience of such an exchange as is now usual among mer-chants was well enough understood then, but it was deemed necessary to take security for the payment of the bill. Transactions of the same kind have doubtless occurred at all periods where parties have had sufficient confidence in each other; but that they were un-frequent is manifest from the silence of the Roman law in respect thereto.

It is said that the Jews of the middle ages first introduced bills of exchange into ordinary use, and this is entitled to credit, inasmuch as the frequent migrations and spoliations to which they were subjected in those times of persecution made an easy transmission of wealth and its safe keeping in foreign countries almost a necessity. Of course the bills drawn by them were upon persons of their own race. The negotiation of bills of exchange by law can be traced back about 4 1/2 centuries, the earliest being an ordinance of the city of Barcelona in 1394 respecting the acceptance of bills of exchange. An edict of Louis XL in 14G2 is the first notice of the subject in the laws of France. (See Kent's Commentaries," vol. iii., p. 72, note.) -In form, a bill of exchange is an order or request addressed by one person to another directing the payment of money to a third person. The first is called the drawer; the second is the drawee until the bill has been presented and accepted, and then he is called the acceptor; the third is the payee.

But sometimes the bill passes through several hands, which may be either by successive indorsements specifying to whom payment is to be made or by what is called an indorsement in blank, by which is meant that the payee, or the subsequent holder to whom the bill has been indorsed, merely writes his own name on the bill, which is equivalent to making it payable to bearer. The most important incident of a bill of exchange is its negotiability, that is to say, facility of transfer from one person to another., For this purpose it is essential that the engagement of the several parties, whether drawer, acceptor, or indorser, should be disentangled from all matters not appearing upon the face of the bill. This, therefore, is the general rule, subject to some exceptions which will be presently mentioned. Equally necessary is it that the bill itself should by its terms involve no uncertain contingency, as to depend upon an event that may not happen, or upon some condition which may be the subject of controversy. Hence it has been uniformly held that it must be payable at a fixed time, that is to say, at some period which is certain; but it may be so far contingent as to depend upon an event which must inevitably happen, though the precise time cannot be specified.

Thus a bill may be payable a certain time after the death of a particular person; but it would not be a good bill if made payable after the arrival of a certain vessel. The one event is certain to happen at some period, though it may be remote; the other may not happen at all. Again, a bill of exchange must be expressed to be for the payment of money only, and would not be good if payable in cattle or other species of property, nor even if made payable in bank bills, though it is held in some cases that if payable in currency it is a good bill, as this implies specie or its equivalent. When it is said that a bill is not good if subject to any contingency or payable otherwise than in money, it is intended merely that it is not negotiable with the legal effect which appertains to a bill drawn in the prescribed form. It may nevertheless constitute a valid contract between the original parties, and may even be transferred so as to vest in the assignee the same right which the payee would have had against the drawer or acceptor. The transfer in such case will, however, be subject to the same rules that apply to other personal contracts usually denominated choses in action.

In other words, the transfer is itself a contract; and although it is not necessary that it should be in writing, yet it derives no aid from mercantile usage respecting the indorsement of bills. . The delivery of a note not negotiable may give an ownership if so designed, and this is so in respect to a bond or other contract. But by the common law there was this limitation, that the right of the holder could be enforced only in the name of the original obligee, it being a rule that a chose in action was not assignable. In equity, however, the right of the assignee was recognized, and so to a certain extent it came to be in the common law courts, the formality of using the name of the assignor in a suit brought upon such chose in action being all that is retained of the old strictness. In most of the states even this has been abrogated, and the real party in interest, by which is meant whoever has the actual ownership, may be the party to the action. Again, such transfer confers no greater right than the original payee or obligee had, and is subject to any defence, legal or equitable, which the other parties had against such payee or obligee prior to actual notice of the assignment, or what in law would be tantamount thereto.

The bill, or rather contract, as it should be termed in the case supposed, is itself also subject to one important rule distinguishing it from a proper bill of exchange, viz., that it does not import a consideration unless expressed. If, therefore, no consideration is specified, parol evidence thereof will be necessary, as the rule of the common law is that a consideration is an essential requisite of a contract; but parol evidence will be inadmissible in all those cases in which by statute it is required that the contract should be in writing, as when the contract is not to be performed within one year, or when it is to answer for the debt of another person, etc. It will now be understood what is the negotiability above referred to as being the peculiar incident of a bill of exchange. The bill, in the first place, imports per se to have been given for value, even if it does not contain the usual clause "for value received," which, though generally inserted, is mere surplusage; and every successive holder who has received it before it was due, in the regular course of business, for a valuable consideration, is entitled to enforce it according to the terms of the obligation expressed therein, without regard to any transactions between the original parties.

To this rule there are some exceptions, as when the bill was given for a gaming debt or when usury is involved, in which cases the bill is declared to be absolutely void by statutes in England, which have been generally reenacted in the United States. When there has been fraud in the transaction to which the bill relates, which would have been a defence as between the original parties, the rule is that a bona fide holder for value is not affected thereby; with however this limitation, that the bill has been received not only without knowledge of the fraud, but without such notice of the circumstances as should have induced suspicion and inquiry. If the bill at the time of transfer has become due, this is in law deemed sufficient to call for inquiry, and the indorsee in such case takes the bill subject to whatever defence there would have been against the party from whom he received it. When a bill has been stolen or lost, and has been put into circulation again, a bona fide purchaser is entitled to enforce it against all previous parties, provided there were no circumstances that should have led him in the exercise of ordinary prudence to inquire into the title of the party from whom he received it.

It will in such a case be a question of fact whether due diligence has been used by the holder, and the burden of proof is imposed upon him, upon its being shown that the bill had been stolen or lost. The question in such case would be between the person who had lost the bill or from whom it had been stolen, and the person who had received it after the theft or loss. The liability of the original parties is not affected. -Bills of exchange are of two sorts, foreign and inland; the former being drawn by a merchant in this country upon another residing abroad, or by a foreign merchant upon one residing here; the latter when both drawer and drawee reside in the same country. The principal rules relating to bills of exchange grow out of mercantile usage respecting foreign bills; but by statute in England and the United States both are now put upon the same footing, with the exception only that damages are allowed upon foreign bills which come back protested for non-acceptance or non-payment. By statute in England and the United States, promissory notes are made negotiable in like manner as inland bills of exchange.

The same principles therefore, in respect to negotiability and the legal incidents thereof, apply to both.