Negotiable paper includes at common law, bills of exchange and notes, and to a limited extent, checks. Bills and notes were designed to take the place of money. The right to transfer money freely from one person to another even where the transferor has not the right or ownership of the money is well known. This right is given and acceded to for the benefit of trade. Negotiable bills and notes are given all the attributes of money, the chief attribute of which is that the transferee of a negotiable bill or note can claim clear title to the same if only he can show himself to be a bona fide purchaser. To constitute one a bona fide purchaser or holder of a negotiable bill or note, the purchaser must first purchase the paper in good faith, without notice of any existing equity between the immediate parties to the paper, and without knowledge of anything defective in the transferor's title, and he must also be a purchaser for value, that is to say, he must pay the market value of the paper, he must also purchase the paper before maturity of the same, and he must purchase the paper in the usual course of business, the last of which requisites requires the purchaser to see that the paper is properly indorsed over to him, as well as delivered, if the terms of the instrument require indorsement; if indorsement is not required, then delivery alone must be properly made.

20 Walker vs. Miller, 59 Fed. Rep., 869.

21 Zoeller vs. Reilly 100 N. Y., 103.

Bills of exchange first acquired the element of negotiability, which element distinguishes the rights acquired by the transferee, on transfer of contracts evidenced by bill or note from the rights acquired under transfer of other contracts, on assignment of the same. The element of negotiability was first given to bills of exchange in England by the Law-Merchant from which custom of the merchants it came to be by general adoption, a part of the common law of England. Promissory notes are claimed by some to have likewise acquired the element of negotiability by common law recognition, however, whatever controversy existed was finally terminated by the passage of the statute of 3 and 4 Anne, Chapter 9, which made promissory notes indorsable and transferable in the same manner as bills of exchange.

One may, on purchase of a bill or note, purchase or acquire even a better title than his transferer had, where the transferor's title is defective, and where he becomes the purchaser of a bill or note as a bona fide purchaser in the full sense of the term.