Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1873-04-23
IMPORTANT LEGAL DECISION.
The Meaning Of Commercial Paper
- Under the Bankrupt Law.
Opinion Of Judge Fmmons, of the Uni.
al ted States Circuit Court.
Reversal Of the Decision Of the Lower
~ Court.
BANKRUPTCY.


before Emmons; District Judge. ~
With an Unusual number OF causes (
decision, and temporarily Unable to Tea
or write from impaired sight, We cam
very satisfactorily put upon paper our re-
sons for reversing the judgment of the Di
trict Court. What We say; however, wi
put counsel in possession of the geEer
views taken; and we will endeavor soon /
prepare a more full and condensed opinion
a petition was filed against Bond &Glee
for suspending, for fourteen days, the pa
ment OF a promissory note payable to tE
order OF Fowler q Slocum, of New Yorl
at a banking house In Kentucky. The
were traders, and the note was given Il
goods purchased in the line of their bus
ness: Before maturity it was discounted ;
a New York bank. The District Com
dismissed he-petition because, by the La
OF Kentucky, the note was not in a flu
common law sense negotiable, and there
fore not within the meaning of the thirty
ninth section of the bankrupt law, CONNER
ctai paper.
We do not think this popularity lii th
local law prevents the operation of th
statute. Circumstances forbid our lookin
carefully into the Law Of Kentucky, but it
precise limitations ara not material 10 tn
disposition OF this case. It is assumed tina
such note is there assignable, so far as to b
sued in the name of the assignee. but pass
es Ike other chooses in action subject {,
equities.
We are favored By counsel with no cita
lions, and are temporarily unable to exam
inc, save through the reading of others
and cannot therefore 60 over the decision
in the Federal Court where they have s,
often refused to follow upon general ques
lions OF commercial law, the local decisions
of State tribunals Sec. 16, Peters /, Swift
vs.. Tyson; do. 495; sum 221, Robinson
VS.. Insurance Co., s. C. Is Peters IA: 8
Howard 218, Miller vs.. Austin; 20. dc
55o, and more particularly IS. Howard
DIT, Austin vs. Larply. And also TaIcott
vs.. Pine Grove, pamphlet, East Dist. Of
Mich. 1872, where most of this class oi
judgments are cited and analysed. With
out more careful study of the local law,
and re-perusal of these Federal cases, we
Will not affirm that such a piece of paper
would be held to pass to bona .fde holder
In another State, free from the equities of
the maker. They are referred TO, more
as suggesting the spirit of Interpretation
which should be applied to a national stat
ute intended to execute the constitution
and create uniform system of bankruptcy.
In re Chandler 4, B. R. 66, the petition
was MED upon accommodation paper. In
deciding it was within the act, Lowell, j.,
refers to theHhistory of promissory notes
and the statute of Anne, which settled the
controversy as to their ass gnability in En-
gland, and adds that this statute has been
adopted by legislation in some States, and
its principle by Judicial decisions in others,
as part OF their common law. For this IA
niliar truth, Story on Notes section 6, note
z, Kent, com. u and note A are cited;
aud see also Parsons on Bills, chapter !,
page Is, where he says "That these notes
were, at the time the statute of Anne was
passed, negotiable; that such doctrine was,
and is, as much part of the law of En-
gland as-to use the strong language of
Christian-the laws relating to marriage or
murder" He cites 8 Blackstone IS and
note; Cranch 367 Appendix note A by the
reporter; Missouri 1914, Irving vs. Mosley;
Alabama 527, Dunn vs. Adams. This is
but smsll portion of the judgments which
so rule. Our only purpose in recurring to
1t Is tc suggest that the condition ofthe law
In Kentucky is in a marked degree exeep-
tional, and that there can be no presump-
ton that Congress intended to exempt
from the operation of this general law, the
paper Of single State, because she denies
10 it a quality accorded by the common
aw, and, so far as we are informed, by eV-
cry other State in the Union.
We do not, however, rest our judgment
1pon any notion that the Federal Courts
viii bold this paper negotiable WHEN trans
erred to bona tide holder. Nor is re-
lance put upon the fact that it is negotia-
Die in common law sense st law. If Ken
lucky, from her earliest history, had seen
1t to compel all obligations for the payment |
# money to be under seal, acknowledged |
'ef Jre magistrate, recorded in the county
ecords and transferred only by the solem-
titles necessary to convey real estate, we |
hould have held that ali such instruments |
riyen by merchants, traders or bankers, in |
he ordinary course of trade, were CONNER |
lal paper within the meaning of the bank
upt law. If such instruments were daily |
ccepted and relied upon by her merchants |
nd business men, and the citizens ofother /
'tates who dealt with them; if they per-
Ormed the same functions there which ne
otiable instruments do in all other parts |
f the commercial world; if the consequent
es of suspension wrought the same evils
that common commerce which Con-
ress has attempted to protect by a bank
upt law, they would come within
bis provision. They would evil
ence the obligations, establish the identi.
al relations, and perform all the offices,
be safety of which it was the intention of
bis law to guard. 1t contempates these
acts, and consequences, and not the
occidental form or local legal incidents of an
lstrumeHt which one State exclusively uses
D create and carry them on. The reason
Thy certain paper should be adjuged not to
9 commercial within the act, is because in
lct it is not accepted and treated as such
l commerce, and does not perform its
lnctioDs. People who receive it do not,
nd, in law, are not authorized to rely upon
be coerciye provisions of the bankrupt law,
} secure puuctuality in its payment. 1t
institutes no part of that active, well-de-
ned, and necessarily prompt set of pro-
esses contemplated by sec ion thirty-nine.
hey are the conventional forms agreed on
= the business classes to indicate transac-
on wholly outside of them. When, on
le contrary, from well-settled usages, they
re actually brought within them, and are
nployed like negotiable notes, the reason
II their exclusion from the statute ceases;
nd every reason for including any class
piles with full force to them. The object
the statute is to promote the safety and
ability of our banking, mercantile and
aDufacturirg operations. +
These are so interlaced, so indivisible,
utuSlly dependent and national that no
he State Can be permitted to withdraw
.rself from the common system by chang !
g the form or Withholding some of the in-
dents which other States accord to COM
ercial paper. Its Office is not altered by
nying in whole or part the feature Of
gotiability. Its essential nature must {
30 be so far changed as to render it in
psble of efecting the purposes of COM
arcial paper, before those citizens who are q
her laws compelled to receive il will be S
MED the protection of the national sys- '
u. l. is by no means necessary where
eat relations and systems are to be regu- 3
ed, that terms shall be employed as d. b
rse and numerous as the local names a
lich indicate, or the legal incidents which
end them. In this Instance the words U
paper" mean and include all a
,se obligations for money which enter y
O and cons itute q part Of the co3lmon n
sness of the country when made by the it
sses dosienated in the statue. If banks
count, if business men accept and rely e.
on it; if it goes out to other States in the a
e. -