Other References on the Subjects of this Part are as Follows:

In Select Essays:

Roman Law Influence in the Law Merchant, by T. E. Scrutton (No. 7, Vol. I).

The Development of the Law Merchant, by W. S. Holdsworth (No. 9, Vol. I).

The History of Admiralty Jurisdiction, by T. L. Mears (No. 30, Vol. II).

In Other Series and Journals:

The Early History of the Law Merchant, by A. T. Carter (Law Quarterly Review, XVII, 232; 1901).

The History of Marine Insurance, by F. Martin (1876).

The History of the Liability of Ship-Owners at Common Law, by E. L. de Hart (Law Quarterly Review, V, 15; 1889).

The History of the Water-Carrier and his Responsibility, by J. B. C. Stephen (Law Quarterly Review, XII, 116, 1896).

Trust and Corporation, by F. W. Maitland (Zeitschrift fuer das Privat—und Oeffentliches Recht der Gegenwart, ed. Gruenhut, Vienna, XXIII, 1; 1904).

The Corporation Sole, by F. W. Maitland (Law Quarterly Review, XVI, 335; 1900).

History of Admiralty Jurisdiction in the United States Supreme Court, Anon. (American Law Review, V, 581; 1871).

History of Joint Stock Companies, by T. B. Napier (Ch. XII in “A Century of Law Reform,” 1901).

The Genesis of a Corporation, by R. L. Raymond (Harvard Law Review, XIX, 350; 1906).

History of the Common-Law Conception of a Corporation, by E. B. Seymour (American Law Register, New Series, XLII, 529; 1902).

Carriers and the Common Law, by O. W. Holmes (American Law Review, XIII, 609; 1879).

The Court of Piepowder, by C. Gross (Quarterly Journal of Economics, XX, 231; 1906).

Legislative History of Corporations in New York, by A. B. Johnson (Hunt’s Merchants’ Magazine, XX, 610; 1850).

Borough Customs, Introduction by Mary Bateson (Selden Society Publications, vols. XVIII, XXI, 1904-6).

Beverly Town Documents, Introduction by A. F. Leach (Selden Society Publications, vol. XIV; 1900).

Select Pleas of the Jewish Exchequer, Introduction by J. M. Rigg (Selden Society Publications, vol. XV; 1901).

The Leet Jurisdiction of Norwich, Introduction by W. Hudson (Selden Society Publications, vol. V; 1891).

The Law Merchant, , Introduction by C. Gross (Selden Society Publications, vol. XXIII; 1908).

Leet Jurisdiction in England, by F. J. C. Hearnshaw (Southampton Record Society, 1908).

The Internal Organization of the Merchant Adventurers of England, by W. E. Lingelbach (Phila. 1903).

The Evolution of the English Joint-Stock Trading Company, by F. Evans (Columbia Law Review, VIII, 339, 461; 1908).

47.: GENERAL SURVEY OF THE HISTORY OF THE LAW MERCHANT1

IF you read the law reports of the seventeenth century you will be struck with one very remarkable fact; either Englishmen of that day did not engage in commerce, or they appear not to have been litigious people in commercial matters, each of which alternatives appears improbable. But it is a curious fact that one finds in the reports of that century, two hundred years ago, hardly any commercial cases. If one looks up the Law of Bills of Exchange, “the cases on the subject are comparatively few and unimportant till the time of Lord Mansfield.”3 If you turn to Policies of Insurance, and to the work of Mr. Justice Park on the subject published at the beginning of this century, you find him saying: “I am sure I rather go beyond bounds if I assert that in all our reports from the reign of Queen Elizabeth to the year 1756, when Lord Mansfield became Chief Justice of the King’s Bench, there are sixty cases upon matters of insurance.”4 If you come to Charter Parties and Bills of Lading, Edition: current; Page: [8] which have always been productive of litigation, you find Sir John Davies in the seventeenth century saying that “until he understood the difference between the Law of Merchants and the Common Law of England, he did not a little marvel what should be the cause that in the books of the Common Law of England there should be found so few cases concerning merchants and ships, but now the reason was apparent, for that the Common Law did leave these cases to be ruled by another law, the Law Merchant, which is a branch of the Law of Nations.”1

The reason why there were hardly any cases dealing with commercial matters in the Reports of the Common Law Courts is that such cases were dealt with by special Courts and under a special law. That law was an old-established law and largely based on mercantile customs. Gerard Malynes, who wrote the first work on the Merchant Law in England, called his book, published in 1622, “Consuetudo vel Lex Mercatoria,” or the Ancient Law Merchant; and he said in his preface: “I have entituled the book according to the ancient name of Lex Mercatoria, and not Jus Mercatorum, because it is a customary law approved by the authority of all kingdoms and commonweales, and not a law established by the sovereignty of any prince.” And Blackstone, in the middle of the last century, says: “The affairs of commerce are regulated by a law of their own called the Law Merchant or Lex Mercatoria, which all nations agree in and take notice of, and it is particularly held to be part of the law of England which decides the causes of merchants by the general rules which obtain in all commercial countries, and that often even in matters relating to domestic trade, as for instance, in the drawing, the acceptance, and the transfer of Bills of Exchange.”2 Later than Blackstone, Lord Mansfield lays down that “Mercantile Law is not the law of a particular country, but the law of all nations”;3 while so recently as 1883 you find Lord Blackburn saying in the House of Lords that “the general Law Merchant for many years Edition: current; Page: [9] has in all countries caused Bills of Exchange to be negotiable; there are in some cases differences and peculiarities which by the municipal law of each country are grafted on it, but the general rules of the Law Merchant are the same in all countries.”1

Now if we follow the growth of this Law Merchant or Mercantile Law, which was two hundred years ago so distinct from the Common Law, we find it in England going through three stages of development.2 The first stage may be fixed as ending at the appointment of Coke as Lord Chief Justice in the year 1606, and before that time you will find the Law Merchant as a special law administered by special Courts for a special class of people.

In the first place as to the special Courts. The greater part of the foreign trade of England, and indeed of the whole of Europe at that time, was conducted in the great fairs, held at fixed places and fixed times in each year, to which merchants of all countries came; fairs very similar to those which meet every year at the present time at Novgorod in Russia, and at other places in the East. In England, also, there were then the great fairs of Winchester and Stourbridge, and the fairs of Besançon and Lyons in France, and in each of those fairs a Court sat to administer speedy justice by the Law Merchant to the merchants who congregated in the fairs, and in case of doubt and difficulty to have that law declared on the basis of mercantile customs by the merchants who were present. You will find this Court mentioned in the old English law books as the Court Pepoudrous, so called because justice was administered “while the dust fell from the feet,” so quick were the Courts supposed to be. “This Court is incident to every fair and market because that for contracts and injuries done concerning the fair or market there shall be as speedy justice done for advancement of trade and traffic as the dust can fall from the feet, the proceeding there being de hora in horam.”3 Indeed, so far back as Bracton in the thirteenth century, it had been recognized that Edition: current; Page: [10] there were certain classes of people “who ought to have swift justice, such as merchants, to whom justice is given in the Court Pepoudrous.”1 The records of these Courts are few, for obviously in Courts for rapid business law reporters were rather at a discount. As a consequence, “there is no part of the history of English law more obscure than that connected with the maxim that the Law Merchant is part of the law of the land.”2 We are, however, fortunate enough to have one or two records of the Courts of the Fairs. The Selden Society has succeeded in unearthing the Abbot’s roll of the fair of St. Ives held in 1275 and 1291,3 containing a series of cases which show how the merchants administered the Law Merchant in the Courts of the fair, and why such cases did not come into the King’s Court. For instance:—“Thomas, of Wells, complains of Adam Garsop that he unjustly detains and deforces from him a coffer which the said Adam sold to him on Wednesday next after Mid Lent last past for sixpence, whereof he paid to the said Adam twopence and a drink in advance” — (it appears to have been a very good mercantile custom, still existing, to “wet a bargain,” and the drink was a matter to which great importance was attached by the merchants present); “and on the Octave of Easter came and would have paid the rest, but the said Adam would not receive it nor answer for the said coffer, but detained it unconditionally to his damage and dishonour, 2s., and he produces suit. The said Adam is present and does not defend. Therefore let him make satisfaction to the said Thomas and be in mercy for the unjust detainer; fine 6d.; pledge his overcoat.” The next defendant was not so fortunate as to have an overcoat. “Reginald Picard of Stamford came and confessed by his own mouth that he sold to Peter Redhood of London a ring of brass for 5½d., saying that the said ring was of the purest gold, and that he and a one-eyed man found it on the last Sunday in the churchyard of St. Ives, near the cross.” (One fancies one has heard that tale about the brass ring before.) “Therefore it is considered Edition: current; Page: [11] that the said Reginald do make satisfaction to the said Peter for the 5½d. and be in mercy for the trespass; he is poor; pledge his body.” The next case introduces the Law Merchant. “Nicolas Legge complains of Nicolas of Mildenhall for that unjustly he impedes him from having, according to the usage of merchants, part in a certain ox which Nicolas of Mildenhall bought in his presence in the village of St. Ives on Monday last past to his damage 2s., whereas he was ready to pay half the price, which price was 2s. 6d. And Nicolas of Mildenhall defends, and says that the Law Merchant does well allow that every merchant may participate in a bargain in the butcher’s trade if he claim a part thereof at the time of the sale; but to prove that the said Nicolas Legge was not present at the time of the purchase nor claimed a part thereof he is ready to make law.” Then they went to the proof. The custom of the Law Merchant relied on admitted any merchant standing by to claim a share in any bargain on paying a share of the price. The defence is, “You were not there, so you cannot claim.” The next and last case is one which puzzled the Court, and therefore I omit the details, but it is recited in the Abbot’s roll: “And the case is respited till it shall be more thoroughly discussed by the merchants. And the merchants of the various commonalties and others being convoked in full Court it is considered”—and then they go on to discuss it. There you see the Merchants’ Court at work, giving quick justice in all mercantile disputes, and in cases of doubt calling upon the merchants present to declare what the Law Merchant is. So much for the fairs.

In most seaport towns also you would find a similar Court dealing with cases arising out of ships. In the Domesday Book of Ipswich1 it is stated, “The pleas between strange folk that men call ‘pypoudrous’ should be pleaded from day to day. The pleas in time of fair between stranger and passer should be pleaded from hour to hour, as well in the forenoon as in the afternoon, and that is to wit of plaints begun in the same time of fair, and the pleas given to the law Edition: current; Page: [12] marine for strange mariners passing, and for them that abide not but their tide, should be pleaded from tide to tide.” Any ship coming into the port of Ipswich with a dispute about its Charter Party or Bill of Lading may get summary justice at once from this Court at Ipswich between tide and tide. Stress may be laid on the fact that the Courts sat in the afternoon, because at that time the King’s Courts only sat from eight in the morning till eleven and then adjourned for the rest of the day. “For in the afternoons these Courts are not holden. But the suitors then resort to the perusing of their writings, and elsewhere consulting with the serjeants-at-law and other their counsellors,”1 so that the time taken up in consultation by the Courts in London was taken up by the Courts at Ipswich in dealing summarily with cases, and letting the strange mariners go who were only waiting for their tide.

There were special Courts by statute, of which a number of “grave and discreet merchants” were necessary members, in order that the Mercantile Law founded on the custom of merchants might be duly applied to the case before them.2 The law which these Courts administered was what was called by merchants the Law Merchant and Law of the Sea, and it was common to nearly every European country. Much of it was to be found in a series of codes of Sea Laws, such as the Laws of Oleron and Wisbury, and the Consolato del Mare, embodying the customs and practices of merchants of different countries, and it was not the Common Law of England. Further, it was only for a particular class. You had to show yourself to be a merchant before you got into the Mercantile Court; and until about two hundred years ago it was still necessary to show yourself to be a merchant in the Common Law Courts before you could get the benefit of the Law Merchant.3

Now the second stage of development of the Law Merchant Edition: current; Page: [13] may be dated from Lord Coke’s taking office in 1606, and lasts until the time when Lord Mansfield became Chief Justice in 1756, and during that time the peculiarity of its development is this: that the special Courts die out, and the Law Merchant is administered by the King’s Courts of Common Law, but it is administered as a custom and not as law, and at first the custom only applies if the plaintiff or defendant is proved to be a merchant. In every action on a Bill of Exchange it was necessary formally to plead “secundum usum et consuetudinem Mercatorum”—according to the use and custom of merchants;1 and it was sometimes pleaded that the plaintiff was not a merchant but a gentleman.2 And as the Law Merchant was considered as custom, it was the habit to leave the custom and the facts to the jury without any directions in point of law, with a result that cases were rarely reported as laying down any particular rule, because it was almost impossible to separate the custom from the facts; as a result little was done towards building up any system of Mercantile Law in England. The construction of that system began with accession of Lord Mansfield to the Chief Justiceship of the King’s Bench in 1756, and the result of his administration of the law in the Court for thirty years was to build up a system of law as part of the Common Law, embodying and giving form to the existing customs of merchants. When he retired, after his thirty years of office, Mr. Justice Buller paid a great tribute to the service that he had done. In giving judgment in Lickbarrow v. Mason,3 he said: “Thus the matter stood till within these thirty years. Since that time the Commercial Law of this country has taken a very different turn from what it did before. Lord Hardwicke himself was proceeding with great caution, not establishing any general principle, but decreeing on all the circumstances put together. Before that period we find in Courts of Law all the evidence in mercantile cases was thrown together; they were left generally to the jury, and they produced no established principle. From that time Edition: current; Page: [14] we all know the great study has been to find some certain general principle, not only to rule the particular case under consideration, but to serve as a guide for the future. Most of us have heard those principles stated, reasoned upon, enlarged, and explained till we have been lost in admiration at the strength and stretch of the human understanding, and I should be sorry to find myself under the necessity of differing from Lord Mansfield, who may truly be said to be the founder of the Commercial Law of this country.” Lord Mansfield, with a Scotch training, was not too favourable to the Common Law of England, and he derived many of the principles of Mercantile Law, that he laid down, from the writings of foreign jurists, as embodying the custom of merchants all over Europe. For instance, in his great judgment in Luke v. Lyde,1 which raised a question of the freight due for goods lost at sea, he cited the Roman Pandects, the Consolato del Mare, laws of Wisbury and Oleron, two English and two foreign mercantile writers, and the French Ordonnances, and deduced from them the principle which has since been part of the Law of England.2 While he obtained his legal principles from those sources, he took his customs of trade and his facts from Mercantile Special Juries, whom he very carefully directed on the law; and Lord Campbell, in his life of Lord Mansfield, has left an account of Lord Mansfield’s procedure. He says:3 “Lord Mansfield reared a body of special jurymen at Guildhall, who were generally returned on all commercial cases to be tried there. He was on terms of the most familiar intercourse with them, not only conversing freely with them in Court, but inviting them to dine with him. From them he learned the usages of trade, and in return he took great pains in explaining to them the principles of jurisprudence by which they were to be guided. Several of these gentlemen survived when I began to attend Guildhall as a student, and were designated and honoured as ‘Lord Mansfield’s jurymen.’ One in particular I remember, Mr. Edition: current; Page: [15] Edward Vaux, who always wore a cocked hat, and had almost as much authority as the Lord Chief Justice himself.”

Since the time of Lord Mansfield other judges have carried on the work that he began, notably Abbott, Lord Chief Justice, afterwards Lord Tenterden, the author of “Abbott on Shipping,” Mr. Justice Lawrence, and the late Mr. Justice Willes; and as the result of their labours the English Law is now provided with a fairly complete code of mercantile rules, and is consequently inclined to disregard the practice of other countries. In Lord Mansfield’s time it would have been a strong argument to urge that all other countries had adopted a particular rule; at the present time English Courts are not alarmed by the fact that the law they administer differs from the law of other countries.

48.: THE MERCHANTS OF THE STAPLE1

‘CENTURY after century,’ says Dr. Le Bon in his Psychology of Peoples, ‘our departed ancestors have fashioned our ideas and sentiments, and in consequence all the motives of our conduct. The generations that have passed away do not bequeath us their physical constitution merely; they also bequeath us their thoughts. We bear the burden of their mistakes, we reap the reward of their virtues.’ The good as well as the evil that men do lives after them to the advantage or detriment of thousands of whom they never thought, and who, as likely as not, have never heard of them. A legal code, a method of legal procedure, may affect interests separated by centuries of time from those which in the first instance they were intended to serve. The civil law of Rome, embodied in the codes of Theodosius and Justinian in the fifth and sixth centuries, has been the guide and model for most of the legal systems of Europe, the common law of England and the Code Napoléon of France bearing eloquent testimony to the abilities of the great jurists who lived and laboured under the Roman Empire.

The staple system,3 long since dead and gone, but once a Edition: current; Page: [17] most important element in moulding and directing the commercial activities of this country, is an instance on a smaller scale of how an organization, which has for practical purposes completely vanished, may yet exert a modifying influence over some detail intimately connected with a people’s well-being. . . .1 The connexion between the merchants of the staple and bearer debentures is perhaps not very obvious at first sight. Nevertheless there is a connexion, and a not unimportant one. The law merchant in former days was not, as now, a part of the common law administered by the judges of the Queen’s Bench; it had officials of its own, who exercised jurisdiction in the staple courts. Had it always been part and parcel of the common law, it is highly probable that cases connected with bills of exchange would appear in the law books earlier than the time of James I, seeing that they were probably well known in England at least three centuries previously. Owing to the fact that no mention of them occurs at an earlier date, it has been argued that the custom of treating bills of exchange as negotiable did not date from time immemorial (the reign of Richard I), and that if, in spite of that fact, these instruments have been recognized as being rendered negotiable through the instrumentality of the law merchant, there is no reason why debentures to bearer should not likewise be acknowledged as negotiable instruments without the intervention of a statute, although they are avowedly of comparatively recent origin. Now, if it could be shown that bills of exchange were dealt with in the courts of the staple as early as the reign of Richard I, this argument would obviously fall to the ground. It is, however, improbable that any records were kept of proceedings in these courts, and even if such records did exist, it would certainly be difficult to carry them back as far as the end of the twelfth century, if the instruments themselves were, as tradition relates, Edition: current; Page: [18] introduced by the Venetians in the thirteenth. It is a possible, if not a very probable, hypothesis that some of the Assyrian contract-tablets in the British Museum are bills of exchange in a rudimentary form; but, so far as concerns the decision of the question whether the debentures to bearer called into existence for the mercantile convenience of the nineteenth century are or are not negotiable instruments, any inquiry on the point is hardly likely to be fruitful of important results. But the mere fact that greater light on the peculiar law by which the mercantile community was governed in the early phases of our history might effectually modify the commercial relations of to-day, proves that the institutions of our remote ancestors are occasionally of more immediate concern to us than the ‘practical’ man is apt to believe.

Involved in obscurity as the precise origin of the staple system is, it is not difficult to understand how it came into existence. Until almost the end of the reign of Edward III the policy of the English Government tended rather to discourage than to encourage trading abroad by its subjects. That may not have been the intention, but it was the effect of the regulations imposed. At that comparatively late period English merchants were practically excluded from foreign commerce, and their struggles against aliens were chiefly waged around the internal trade of the country. In the twenty-seventh year of Edward III we find it enacted that denizens and aliens alike may purchase wools, &c., in the counties, and convey them to the ports of embarkation, but that the process of exporting shall be exclusively in the hands of the foreigners, and that no subject of the realm shall export wools for himself in the name of an alien, nor have any agent abroad for that purpose, nor receive payment for the same abroad. Naturally enough such regulations as these caused a feeling of intense jealousy against the foreign merchants, particularly when they settled in this country and interfered with Englishmen, who, with some justification, considered that, as compensation for the disabilities they were under as regarded foreign commerce, they should at least be allowed a free hand in the country’s internal trade. The citizens of London had long since formulated regulations of their Edition: current; Page: [19] own under which aliens should trade. Unfortunately, however, they found themselves unable to enforce their rules, and when they complained to Edward I that they, who bore the common burdens of the town, were impoverished by the competition of foreigners, whose stay was now unlimited instead of, as formerly, restricted to forty days, that monarch refused to assist them. Edward was inclined to favour the merchants of Gascony and Flanders, and such confederations as the Hanseatic League, to which he gave a charter of incorporation and a special place of residence in the style-haus. One reason of the favour shown to them probably was that it proved easier to squeeze foreigners bringing their wares into the kingdom than subjects of the realm taking merchandise to the Continent. The latter were always apt to kick against what they believed to be undue exactions, while the former, needing the king’s protection against the hostility of his English subjects, were ready to submit to the payment of tolls which might under other circumstances have struck them as exorbitant.

For another thing, Edward, in favouring the foreigner at the expense of the Englishman, was continuing the policy of his predecessors, and was also giving effect to the generally recognized principle that the foreigners’ visits were to the advantage of the country. They imported wine and manufactured commodities, they exported the raw English products; and it is quite possible that, had it not been for them, England would in the early centuries have been without a foreign trade at all. It is highly probable that the policy was extended, as many a policy has been, beyond the period when it was desirable in a strictly economical view of this country’s interests; but the clauses of the Great Charter had granted freedom of trade to the foreigner, and the towns, in their municipal regulations as well as by their representatives at Acton Burnel, had acquiesced in his encouragement. Aliens were, indeed, forced to pay customs at a higher rate than subjects, but this does not seem to have had any serious effect in counteracting the privileges they enjoyed. At any rate, the English shipowners appear to have been at a disadvantage during the greater part of the reign of Edward III, and it Edition: current; Page: [20] was not until the Navigation Act of Richard II aimed a blow at the Gascon merchants that the Englishmen were able to thoroughly establish their footing in foreign trade. It was then, indeed, that the export trade of the country was beginning to be organized in the hands of the Merchant Adventurers and the Staplers.1

We must not, however, suppose that English activities were entirely confined to English soil; that would be to presume that a change has taken place in English character for which six centuries, howsoever eventful, would be quite inadequate to account. The end of the thirteenth and the beginning of the fourteenth centuries may be taken as the culminating point of a long period of steady and solid progress. The towns, which were the centres of commercial life, were in a highly prosperous condition, and the circumstances of the time were generally favourable to a rapid industrial advance. It was, therefore, only to be expected that, however Englishmen as a body might be hampered by governmental restrictions in forming commercial connexions abroad, a natural pushfulness would carry an individual here and there over all the obstacles set in his way. That this expectation is not unfounded is proved by the fact that an old writer mentions a mayor of the English merchants trading in Flanders as having been sent to settle certain disputes in the year 1313.2 Such an official could only have belonged to some kind of recognized association, and it may accordingly be fairly assumed that English traders were by no means unknown on the Continent in the early years of Edward II, while it is highly probable that they frequented various marts in Brabant, Flanders, and Antwerp at a considerably earlier date.

However that may be, the institution which was subsequently to give the impetus to and exert a powerful influence over England’s foreign trade became a distinct political organism in the reign of Edward III. It had long been the custom to hold fairs at all places of any importance throughout the kingdom. Thither the country folk would bring their produce for sale, and there, until the time of Edward III, Edition: current; Page: [21] the greater part of the wholesale trade of the country was transacted, aliens being free to frequent them.1 The policy of the fourteenth century, however, was to draw trade into a few selected towns in which were established continuous markets or staples, and not to be content with the occasional opportunities for trade which the intermittent fairs afforded. The same policy seems to have been pursued in Norway where Bergen was the staple for the Iceland trade, and in France where Philip did his utmost in 1314 to induce the English to frequent the staple at St. Omer instead of the fair at Lille.2 That it was not always easy to give effect to the policy is evident from the proceedings relating to the royal staple at Bergen. The English persisted in trading direct with Iceland, and set at naught the regulations which governed transactions at the staple. The King of Norway thereupon confiscated the goods of English merchants throughout his dominions, a step which caused general consternation, since there were no Danish merchants trading with England against whom reprisals could be made. The contraband trade with Iceland, however, continued to be carried on in spite of these endeavours to put it down, until in 1476 the ravaging of the island and the slaughter of the royal bailiff was met by the prompt exclusion of the English from Bergen and the triumph for the time of the Hanseatic League.3

Still, in spite of constant violations, the staple system grew and throve. It is possible that the majority of merchants preferred to have one or more marts assigned, where English produce might regularly be supplied, so that those who wished to purchase it could frequent that recognized place of sale. In early times, when the stream of commerce was too feeble to permeate constantly to all parts of the country, the concentration of trade at certain staple towns was probably advantageous to its growth; particularly as the merchants assembling there might obtain a grant of political and judicial privileges, which they could not hope for unless they undertook to frequent the town and pay the dues regularly. Jurisdiction to enforce bargains must in particular have been Edition: current; Page: [22] a highly valued privilege at a time when the execution of contracts generally was not easily compellable by legal process, and was probably well worth the sacrifice of the freedom of trade which the staple regulations entailed. And although there were some traders who preferred to trade at other ports than the staple, and were willing to pay for royal licenses to do so, we may assume that the system met, on the whole, with the approval of the commercial classes. At any rate we find that the merchants of Scotland considered it desirable to fix a staple at Campfer in 1586 and not to have an open trade, and if the system had not possessed substantial advantages it would certainly not have met with so generally favourable a reception as it did. The objects of the staple system were fourfold:

Primarily it was a fiscal provision, its object being to facilitate the collection of the royal customs; and it is easy to see how much more simple a matter this collection would become if exportation were confined to a dozen English ports and one foreign centre, than if permitted at the absolute discretion of the producer or the merchant. To the king it was a matter of personal interest that the duties should be fully paid, since his private expenditure depended in those days upon the customs, and he was accordingly willing to confer such privileges as would be likely to entice traders to comply with the regulations of the system.

In the second place, the staple system fulfilled a useful function by ensuring the quality of exported goods. Commercial morality was none too high in those days, and the average trader fully appreciated the maxim caveat emptor. He had not the ingenuity of his nineteenth-century successor, but such tricks as he knew for the undoing of the consumer he too often practised with energy and perseverance. The staple checked his activities in this direction by providing a machinery for viewing and marking merchandise at the staple towns and places of export.1 The statute 27 Edward III enacted that all wool for export should be brought to fifteen staple towns named therein, and that the weight should be certified by the mayor of the staple under his seal. When the staple Edition: current; Page: [23] town and the place of export were not identical (the port for York, for instance, was Hull; of Lincoln, St. Botolf; of Norwich, Yarmouth; of Westminster, London; of Canterbury, Sandwich; and of Winchester, Southampton), the wool was weighed a second time on reaching the port; but where the staple town was itself a seaport, as were Newcastle, Bristol, and Dublin, a single weighing sufficed. An indenture was then made between the mayor of the staple and the ‘customers,’ and the tolls were paid by the merchant, these being considerably heavier in the case of aliens than denizens.

Even when raw materials only were exported this precaution seems to have been desirable to prevent adulteration, and it no doubt became additionally so as merchandise manufactured in England began to be sold abroad. When the staple system began to decay and the precautions against fraudulent dealing were relaxed, the quality of goods quickly deteriorated. In a Dialogue or Confabulation between Two Travellers, written about the year 1580, we are introduced at a meeting consisting of a ‘Cittye clothyer,’ a ‘contrye clothyer,’ a husbandman and a merchant, at which a discussion takes place as to the causes of the deterioration of English-made clothing. It is generally agreed that the fault lies chiefly with the careless and inefficient methods of examining and marking woollen goods now in vogue, and the husbandman quaintly points out the difference between the good old times and the present. ‘In times paste,’ says he, ‘we had clothes made that woold contynue a man’s lyfe, where now yf yt be worne two or thre yeares yt is so thryd bare as a lowse can have no coverte.’

Thirdly, the system seems at one time to have been employed to replenish the stock of gold in this country. The idea was that the English merchants trading at Calais should refuse to take payment for their wares except in the precious metals, thus enticing the coin of other countries into England; and an old writer complains bitterly that, on a standard rate of exchange being established at Calais, the former practice was given up to the detriment of the kingdom. Adventurers, he tells us, have brought strange merchandise out of Flanders to destroy the manufactures in England, with Edition: current; Page: [24] the result that the king and his lords are in difficulties for money. ‘The whole wealth of the realm,’ he says, ‘is for all our rich commodities to get out of all other realms therefor ready money; and after the money is brought into the whole realm, so shall all people in the realm be made rich therewith. And after it is in the realm, better it were to pay 6d. for anything made in the realm than to pay but 4d. for a thing made out of the realm, for that 6d. is also spent in the realm and the 4d. spent out of the realm is lost and not ours.’1

Edward III, it is true, allowed payment to be made indifferently in gold, silver, or merchandise, so long as the payment took place in this country, and not more money was taken out of the kingdom than was brought in.2 Richard II, however, provided that foreigners were to receive at least half the value of the wares they brought into the kingdom in English merchandise,3 which, whatever may have been the intention, certainly had the effect of keeping coin in the country as well as pushing English goods abroad. Henry VI, after stating that the mint at Calais was ‘like to be void, desolated, and destroyed,’4 provided that the whole payment for wool, woolfels, and tin should be made in gold and silver without collusion, and that the bullion should be brought to the Calais mint. No part of the price was to be left outstanding on goods sold, in order that ‘the same money may be brought within the realm without subtilty or fraud.’5 In the third year of Edward IV, again, we find a petition from the Commons asking that all coin and bullion received at the staple should be brought to the mint at Calais and thence returned to England, showing that Parliament regarded the system as a method of replenishing the gold stocks of the kingdom. The means adopted may not accord with the economic principles of modern times, but there was possibly some justification for them in an age when there was not a constant flow of gold to our shores from Africa, America, and Australia.

Fourthly, the system provided a special tribunal designed Edition: current; Page: [25] ‘to give courage to merchant strangers to come with their wares and merchandise into the realm.’1 The provision of a satisfactory machinery for the recovery of debts was, by the end of the thirteenth century, becoming a prime necessity of the growth of commerce, and the staple system afforded a convenient basis on which to build up a judicial procedure. Wherever a market or fair was held it had been customary from a very remote period that, when disputes arose as to the terms of a bargain, the questions at issue should be decided by four or five of the merchants present on the spot, who were expected to apply the principles and customs recognized as obtaining generally among the trading classes. This practice is referred to in a charter of Henry III as having prevailed for many years previously,2 and it was this informal judicial procedure upon which was now conferred the sanction of parliamentary authority. Justice, it was ordained, was to be done to the foreigner from day to day and hour to hour, according to the law of the staple or the law merchant, and not according to the common law or particular burghal usages.3 Alien merchants were to be impleaded before no tribunal but that of the mayor and constables of the staple.4 These officials were to be elected annually in every staple town by the commonalty of the merchants, aliens as well as denizens. They were empowered to keep the peace, and to arrest offenders for trespass, debt, or breach of contract. The mayor was, further, to have recognizances of debts, a seal being provided for the purpose.5

The court of the staple had no cognizance of criminal offences, unless when the avenger of blood chose to prosecute at his own peril.6 Speaking of the court of the staple at Calais, Mr. Hall says7 that it was a tribunal analogous in many respects to the local councils of the north and west of England under Tudor sovereigns. Its main object was to draw all civil actions in which staplers were in any wise concerned Edition: current; Page: [26] within its jurisdiction, in order to expedite the course of justice and to lessen the expenses incident thereto. In addition to trying civil actions there appears to have been, in that instance, a general jurisdiction to deal with all matters concerning the well-being of the mercantile community; for we find that the mayor, in a full court of all the merchants, was to assign to each merchant lodgings suitable for his entertainment, which he must frequent unless he could show good cause to the contrary. But this extended jurisdiction was granted, no doubt, after the staplers of Calais had been incorporated, and had reference only to the members of the corporation.

It was further enacted, by the statute already referred to, that the mayors, sheriffs, and bailiffs of the towns where the staples were held, should aid the mayors and constables of the staples in the execution of their duties.1 This must be read as referring to those cases only in which these offices were not combined, or, perhaps, as relating to a time before municipal economy had seen the advantage of combination. For we find, in Toulmin Smith’s English Gilds,2 that at the annual induction of the mayor of Bristol ‘there was to be redde the Maires Commission of the Staple with the dedimus potestatem, and upon the same the Maire there to take his othe, after the fforme and effect of a Cedule enclosid withyn the seide dedimus potestatem yf it be then y-come.’ And on the same day the mayor was to call before him his sergeants to be bound with their sureties for the proper execution of their offices during the year ‘as wele in the Staple court as otherwyse.’ This record was written by Robert Ricart, who became Town Clerk of Bristol in 1497. He tells us that he received instructions from one Spencer, the mayor for that year, ‘to devise, ordaigne, and make this present boke for a remembratif evir hereafter, to be called and named the Maire of Bristowe is Register, or ellis the Maire is Kalendar.’ Now, by a charter granted to Bristol in the forty-seventh year of Edward III (1373), jurisdiction was given to the mayor and sheriffs, to hear and determine all suits relating to all contracts, covenants, accounts, debts, trespasses, pleas, and plaints arising Edition: current; Page: [27] within the town of Bristol, its precincts and suburbs, with the exception of those cases only in which a writ of error should lie to the justices in eyre, or of gaol delivery, and also of ‘inquisitions and determinations of customs and subsidies of wool, leather, skins, felts, and other customs and subsidies of us and our heirs by cocket1 or otherwise belonging to us or our heirs from the grant of our faithful people and subjects.’2 These words would seem to show that the officials of the staple and of the borough were not identical in 1373. On the other hand, since Ricart writes as if there were nothing unusual or new in the execution of the duties of the staple by the mayor of the borough, we must conclude that the amalgamation of the staple and the ordinary jurisdictions took place in this instance nearer to 1373 than to 1479. Indeed, the mayor of the staple town, where there was one, would seem to be a most fit and proper person to execute the duties attaching to the staple, since 27 Edward III specifically required one who was well versed in the law merchant to fill the office of mayor of the staple, and no one was more likely to possess the necessary qualification than the man chosen by the burgesses as their representative and head. It would not be safe to conclude that it became at any time a general practice for the mayor of the borough to discharge the duties of mayor of the staple, since we find that at Drogheda the mayor and sheriffs of the borough one year became mayor and constables of the staple in the following year, and master and wardens of the Gild of Merchants in their third year. But as the mayor and sheriffs of Waterford were, by virtue of their office, mayor and constables of the staple at the same time,3 it is probable that such a combination was not unusual.

The foreign merchant was, it appears, not compellable originally (whatever may have been the case at a later date) to bring his case in the staple court: he might, if he so preferred, sue in the courts of common law, and have the law Edition: current; Page: [28] of the land applied instead of the law merchant.1 And although the justices in eyre, of assise, and of the Marshalsea, were not to intervene in matters of which the mayor of the staple had cognizance,2 there was an appeal to the Chancellor and the King’s Council, if the mayor had unduly favoured either party.3 It would seem probable, also, that the Chancellor had an original as well as an appellate jurisdiction; for in the thirteenth year of Edward IV we find that official stating, in a suit brought before him in the Star Chamber by a foreign merchant, that the plaintiff was not bound to sue in the ordinary courts, ‘but he ought to sue here, and it shall be determined by the law of nature in Chancery.’ The administration of justice in the case of foreigners was, he said, to be ‘secundum legem naturae, which is called by some the law merchant, which is the law universal of the world.’ In the case in question the justices certified that, since the plaintiff was an alien, his goods were not forfeited to the Crown as a waif, though they would have been had he been a subject.4 We may, however, surmise that proceedings in the Star Chamber were exceptional, and were possibly only resorted to when the dispute concerned property of more than usual value. Under ordinary conditions the courts of the staple would be the most expeditious and satisfactory means of settling those differences of opinion which were as certain to arise in the course of mercantile transactions in the fourteenth and fifteenth centuries as they are to-day.

If an inquest was held to try the truth of any question in the staple courts, the jury was to consist wholly of denizens, when both parties to the suit were subjects; wholly of aliens, when both of the parties were aliens; and half of denizens and half of aliens, when one of the parties was a subject and the other a foreigner.

The statute staple—the recognizance ‘in the nature of a statute staple’ afterwards became a usual form of security in the ordinary courts—was introduced in the staple courts. It was a bond of record acknowledged before the mayor of the staple, in the presence of one or all the constables. To Edition: current; Page: [29] all obligations made on recognizances so acknowledged it was required that a seal should be affixed, and this seal of the staple was all that was necessary to attest the contract. The seal belonging to the staple court of Poole is still in existence, and bears the words ‘Sijill: Staple in Portu de Pole.’1

With the object of giving effect to the staple regulations a number of the most considerable towns in the kingdom were named as staple towns.2 To these centres the principal raw commodities of the kingdom—such as wool, woolfels, leather, tin, and lead—were brought for sale and exportation, and were in consequence known as the ‘staple’ wares of England, though the term came in time to be applied almost exclusively to wool. In speaking of the growth of duties on exports and imports Blackstone says:—

‘These (i. e. the customs on wool, skins, and leather) were formerly called the hereditary customs of the Crown, and were due on the exportation only of the said three commodities, and of none other: which men styled the staple commodities of the kingdom, because they were obliged to be brought to those ports where the King’s staple was, in order to be there first rated and then exported.’3

The staple was sometimes situated abroad, as at Bruges or Calais, and less frequently at Antwerp, St. Omer, or Middleburgh; sometimes at a number of English towns. Its history is involved in considerable obscurity until the reign of Edward III, but it appears to have been generally maintained in one of the wealthy cities of Flanders, no doubt because most of the English wool went thither to be made into cloth. It is true that we find Edward III, when attempting in the second year of his reign to establish freedom of Edition: current; Page: [30] trade according to the tenor of the Great Charter, declaring that ‘the staples beyond the sea and on this side, ordained by kings in times past,’ should cease.1 But in the seventeenth year of the same reign the merchants petitioned that the staple of wools might be removed to England, whereby would arise the following benefits: the price of wool would be enhanced; less merchandise would be lost at sea by English merchants; less bad money would be introduced into the kingdom; the king would have 40s. from every sack at the expense of aliens only; and the petitioners might receive an assignment of one half the customs paid by aliens in discharge of the debts due to them from the Crown. And, again, in the following year, it is stated ‘that the staple is ill-situate at Bruges. Formerly Italian and Spanish buyers were numerous; now the great cities of Flanders will not open the staple to strangers beyond Flanders.’2 It would, therefore, appear probable that such English staples as did exist were of little importance until the great Statute of Staple of 13543 temporarily abolished their foreign rivals and brought them into prominence. With some subsequent minor alterations, this enactment provided for the regulation of the system so long as it continued an active force in English history. . . .4 Even in the reign of Henry VII, the Merchants of the Staple were a body of no small importance, although the system had been falling into decay during the reigns of several of the first Tudor’s predecessors. The process of disintegration had commenced with the very considerable growth of the English cloth manufacture in the reign of Henry IV. In 1464 a statute of the fourth year of Edward IV recites that ‘owing to subtil bargains made in buying wools before that the sheep, that bear the same, be shorn,’ the clothmakers of the realm can obtain none, ‘to the great grief of them which have been accustomed to have their living by the mean of the making of cloth,’ and consequently forbids such bargains for the future. Many other Acts of the same reign Edition: current; Page: [31] show a solicitude for the growth of the home manufacture, and it is clear that the policy which in 1338 had forbidden the wearing of cloth made out of England, except to the royal family, and had invited, with the assurance of protection and privileges, ‘all cloth-workers of strange lands of whatsoever country they might be,’ had resulted in making England the principal centre of the cloth trade by the middle of the fifteenth century. The proverb that ‘riches follow the staple’ was ceasing to be appropriate. In Henry VI’s reign the revenue from staple commodities had fallen to £12,000 from £60,000, which accrued from the same source in the time of Edward III. This led to an enactment revoking all licenses to trade elsewhere than to Calais saving those granted to the Queen, the Duke of Suffolk, the Prior of Bridlington, and three others, and with the exception also, it would seem, of merchants passing the ‘Streyhts of Marrock,’ no doubt Gibraltar. These prohibitions, however, were apparently ineffectual, and by the close of the reign the Merchants of the Staple had reached a low ebb of prosperity. The seas were unsafe; disbanded captains received their rewards at the expense of the stapler’s monopoly; while the Merchant Adventurers had come upon the scene, and, trading under more favourable auspices than their rivals of the staple, promised to outstrip them in the race for commercial supremacy.1

During the reign of Henry VIII the Merchants of the Staple presented a petition to the Crown setting out their grievances. They pointed out that they had from time immemorial enjoyed a monopoly of traffic in the staple commodities of the kingdom, and reminded Cardinal Wolsey that they had exercised the privilege to the complete satisfaction of the Government. During the Wars of the Roses the garrison of Calais, their pay being eight years in arrear, had risen and compelled the merchants to satisfy their claims. Later had come bad seasons; a murrain had broken out among the flocks; wool was in consequence scarce, and production limited to wealthy graziers, who held back for advanced prices. The war had prevented foreign buyers from coming to Calais, the French, who formerly took 2,000 sacks of wool yearly, Edition: current; Page: [32] now accepting only 400. A continual loss had been suffered on exchange, so that ‘there has not been so little loste as £100,000.’ The consequence was that the members were falling off, and the fellowship was in process of decay.1 The sad condition of the Staplers seems to have met with little sympathy from the Government, although we do find that by a statute of the fifth year of Edward VI only Merchants of the Staple at Calais and their apprentices were to be allowed to buy wool, and that the Merchants of the Staple as well as the Merchant Adventurers were exempted from Elizabeth’s Navigation Act.2

The truth was that the system had by this time outlived the purposes of its creation. The principal feature of the economic history of England from the accession of the Plantagenets for some two centuries and a half was the export trade in wool, and the staple system was a useful, almost a necessary, machinery for the direction of that trade. Gradually, as the manufacture of cloth sprang up, and a trade in that commodity began to take the place formerly held by raw wool, the usefulness of the system declined; and the Staplers, with their anxiety to maintain their monopoly on the lines of the most rigid conservatism, ended by being a clog on the foreign trade of England, with which the ideas of the time were out of harmony. The loss of Calais in 1558 must practically have given the Merchants of the Staple their deathblow; but if anything further was required to complete the downfall, it was administered by an Act of 1660, which totally prohibited the export of wool, thereby producing such a glut of the material in the English markets that it had to be followed by the curious enactment which for nearly 150 years compelled every one to be buried in a woollen shroud.

Perhaps as compensation for this blow Charles II, in 1669, granted a charter of incorporation and a common seal to the Staplers under the title of ‘The Mayor, Constables, and Company of Merchants of the Staple of England.’ Since the conferment of this dignity the company has withdrawn itself from the fierce glare of public life, although it emerged Edition: current; Page: [33] therefrom in the year 1887, and successfully maintained an action against the Bank of England.1 The only other vestige of its former prosperity is Staple Inn in Holborn, near to which, tradition has it, was once the Wool Market of London, and at which the dealers in wool had their quarters. More fortunate than they, the Society of Merchant Adventurers were, we notice, represented by their Master upon the Queen’s visit to Bristol in November last. Yet they, too, are now little but a voice, for the merchant princes of the Tudor age have fallen from their high estate, and their place knoweth them no more.

49.: CONTRIBUTIONS OF THE LAW MERCHANT TO THE COMMON LAW1

IN a recent book of unusual originality, we find the following statement: “The phrase ‘law merchant,’ like many another, is uncritically employed in handy explication of seeming anomalies. As objections to the Mosaic cosmogony, presented by the existence of fossils, were allayed by convenient reference to omnipotence, so perplexing questions relating to negotiable instruments are waived by unthinking allusion to the ‘law merchant.’ Omnipotence and law merchant work their arbitrary will, and are irreducible and distracting.”3 A little later in the volume, the author writes: “As a matter of fact, and not merely of phrase, may we not even ask whether there is a law of merchants, in any other sense than there is a law of financiers or a law of tailors? Frequent use of the word has almost produced the impression that as there was a civil law and a canon law, so also there was somewhere a ‘law merchant,’ of very peculiar authority and sanctity; about which, however, it is now quite futile to inquire and presumptuous to argue.”

Mr. Ewart does not claim that these views accord with Edition: current; Page: [35] the opinions which pervade judicial decisions and standard treatises. On the contrary, he frankly admits that judges and writers of the greatest eminence and learning have held views diametrically opposed to his. The object of the present article is to inquire whether The Law Merchant ought to be dismissed as a mere phrase.

50.: THE EARLY HISTORY OF NEGOTIABLE INSTRUMENTS1

THERE is, upon some subjects, a touching absence of curiosity among English lawyers. Institutions which are the very heart of modern business life, the fountain-heads of not ungrateful streams of litigation, are accepted as though, like the image of Ephesus, they fell direct from heaven for the benefit of a deserving profession. The legal questions to which they give rise are studied with minute care, the legal relationships which they create are made the occasion of microscopic analysis. But the subject itself, the really interesting and important matter, is left untouched.

No example better than negotiable paper. Bills of Exchange, with their kindred documents, have rendered international commerce possible. They are familiar to the business man, the lawyer, the impecunious—a category somewhat comprehensive. They have been the occasion of scores of statutes and thousands of reported decisions. Without them modern life would be impossible or unrecognizable. Yet it is hardly going too far to say that, in England, we have as yet no serious attempt to trace the origin of negotiable instruments. Some of the writers who profess to deal with the law of Bills of Exchange make no allusion whatever to it. Others devote a page or two of discursive remarks to the historical side of the subject,3 as a sort of concession to decency; Edition: current; Page: [52] and occasionally a learned judge drops a remark in the same direction.1 But the net result of these efforts cannot be said to be gratifying. We are favoured with the stock quotations from Cicero and the Pandects (which it is agreed have nothing to do with the matter), with the dicta of Pothier and Heineccius.2 We are told that the first statutory reference to the subject in England is of the year 1379,3 and the first reported decision of 1601.4 For the earliest English treatise we are referred to Malynes, and in the same breath told that Malynes was probably wrong in his most elementary statements.5

Naturally enough, the Germans have not contented themselves with this empirical method. While their study of the Dogmatik of the subject is perpetually bringing out new points of interest, while they watch keenly the abundant legislation, not only of the Continent but also of England, in the hope of establishing something like a logical theory of negotiable instruments, they are equally alive to the historical aspects of the matter. Ever since the establishment of the Zeitschrift für das gesammte Handelsrecht in the year 1858, the writers in that review have been adding to our knowledge of the early history of the Law of Exchange (Wechselrecht), though it must be admitted that anything like unanimity, even upon important points, has not yet been attained. The articles in the Zeitschrift für Handelsrecht are then rather stores of material for the careful elaboration of hypotheses, than authoritative expositions of truth. The same admission must also be made with regard to the more permanent works of Martens,6 Biener,7 Endemann,8 and other writers who have attempted to account for the introduction Edition: current; Page: [53] of negotiable instruments. Subject, however, to this important reservation, it may be possible to put together a few facts of interest to English readers.

The existence of bills of exchange in something like their present form was unquestionably known to the merchants of the fourteenth century. A Piacenza Ordinance of the year 13911 compels campsores to give written acknowledgments of moneys deposited with them, and provides for a special and speedy remedy on such documents. Unfortunately, nothing is said about transferability. But an almost contemporary Ordinance by the magistrates of Barcelona, dated 18th of March, 1394,2 leaves the matter beyond doubt. The Ordinance is concerned with the weights to be used by the silk merchants, and with the form of the acceptance of letters of exchange (y sobre la forma de la aceptacion de las letras de cambio). It is expressly provided that any one to whom a letter of exchange is presented must answer within twenty-four hours whether he will accept (complira) or no, and must further indorse on the letter the decision to which he comes, together with the exact date of the presentation. If he fails to comply with this rule, he is to be deemed to have accepted (que lo dit cambi li vage per atorgat).

Half a century later, an Ordinance of the French King Louis XI,3 creating or renewing4 a quarterly fair in the town of Lyons, refers to the use of lectres de change as an established institution for merchants whose business compels them to frequent fairs. The whole Ordinance gives us a curious glimpse into the political economy of the Middle Ages. During the fair-days foreign moneys may be used, the fiscal regulations as to the export of coin and precious metals are suspended, the trade of money-changer may be exercised by persons of all nations, except noz ennemis ançiens, the English. But it is more for our present purpose to know that, during the fairs, money may be remitted in all Edition: current; Page: [54] directions by lectres de change, so long as it does not find its way either to Rome or England, and that a special court is to sit for summary process against defaulters on such letters, en faisant aucune protestation, ainsi qu’ont accoustumé faire marchands frequentans foires. Unfortunately, the precise nature of this summary process is described neither here nor in the Piacenza Ordinance, though the latter states that it is to be sine aliquâ petitione seu libello.

The work of Pegoletti of Florence, Practica della Mercatura, attributed by Martens1 to the commencement of the fourteenth century, contains unmistakable references to scritti di cambio, and indeed makes use of several of the technical terms so familiar at the present day. Further back than the fourteenth century, however, it does not seem possible to trace the existence of negotiable instruments in their modern form; in fact there is some slight negative evidence against their existence prior to the middle of the thirteenth century. Salvetti, the author of the Antiquitates Florentinae, mentions a Corpus Artis Cambii Sanctionum of the year 1259, which dealt largely with the art of weighing and testing coin, but did not recognise the existence of literas cambii. Ex iis tandem (says Salvetti) eruitur Florentinorum fuisse literarum cambii utilissimum inventum.2

Our enquiry into the earlier history of negotiable paper will, therefore, be of a purely biological character. We shall have to trace in the clauses of early medieval documents the germs from which the limbs of the negotiable instrument, so startlingly different from the orthodox forms of legal anatomy, were developed. For we may be quite sure that negotiable instruments were not an invention, but a development.

But before turning to this biological enquiry, let us satisfy ourselves that the legislators and writers of the fourteenth and early fifteenth centuries were dealing with facts, not with fictions. Hitherto we have only had references to imaginary instruments. We want to see concrete examples.

The oldest known to me is a bill of exchange of the 5th Edition: current; Page: [55] October, 1339. It is drawn by Barna of Lucca on Bartalo Casini and company of Pisa, payable to Landuccio Busdraghi and company of Lucca in favour of Tancredi Bonaguinta and company. It reads thus:—

Al nome di Dio amen. Bartalo e compagni: Barna da Lucha e compagni salute. Di Vignone. Pagherete per questa lettera a di xx di novembre 339 a Landuccio Busdraghi e compagni da Luca fiorini trecento dodici e tre quarti d’ oro per cambio di fiorini trecento d’ oro, che questo di della fatta n’avemo da Tancredi Bonaguinta e compagni, a raxione di IIII e quarto per C alloro vantaggio, e ponete a nostro conto e ragione. Fatta di V d’ ottobre 339.—Francesco Falconetti ci a mandate a paghare per voi a gli Acciaiuoli scudi CCXXX d’ oro.

The letter is addressed—Bartalo Casini e compagni in Pisa. It bears also a trade-mark, near to which is the word Prima.1

Another example, though sixty years younger, is of interest for our purpose, for it is contained in a reference sent by the magistrates of Bruges to the magistrates of Barcelona, whose exchange-ordinance we have already noticed. Inasmuch as there was no political connection between Barcelona and Bruges at the beginning of the fifteenth century, the reference must have been occasioned by one of two facts—the residence of the drawee at Barcelona, or some special reputation possessed by the Catalonian city in exchange matters. In either case the fact is interesting. Of course the practice of ‘stating a case’ for the opinion of a specialist or learned body was extremely familiar to the courts of the later Middle Ages; Henry VIII’s divorce question affording a conspicuous example. Here, however, is the document:—

Al nome di Dio amen. A di 18 Maggiore, 1404. Pagate per questa prima di cambio ad usanza à Piero Gilberto et à Pièro di Scorpo scuti mille de Felippo à soldi 10 Barcelonesi per scuto, i quali scuti mille sono per cambio, che (. . .) con Giovanni Colombo à grossi 22 di 9. scuto; et pagate à Edition: current; Page: [56] nostro conto et Christo vi guardi.—Antonio Quarti Sal. de Bruggias.

The letter is addressed—Francisco de Prato et Comp. à Barsalona.1

Here then we have two bills or letters of exchange, one upwards of 500 years old, the other only half a century younger, which would (unquestionably) be perfectly intelligible to any English merchant at the present day. Three points of difference may, however, be briefly noted.

1. Each bill has four parties, instead of, according to modern practice, three. In addition to the drawer, drawee, and payee, there is a presenter, or recipient on behalf of the payee. We shall see that this is the common practice, and we may be able to offer a suggestion as to its meaning.

2. The name of the drawee is indorsed. In the first bill it appears also on the face, in the second it does not. This fact will come in usefully hereafter.

3. The second bill is written in Italian, though none of the parties to it have (apparently) an Italian domicile, nor does there seem to be any essential reason for the choice of language. This fact seems to point to an early Italian influence in bills of exchange.

Can we now go a step further, and vivify our notions of early negotiable instruments by observing them as subjects of actual litigation? Fortunately we can; and the glimpse will not be without interest, as it can only be obtained through the medium of fragmentary publications.

On the establishment of the Belgian kingdom in 1837, the new Government, in the ardour of patriotism, undertook the issue of a Récueil des anciennes Coutumes de la Belgique. Two of the most important publications of the Royal Commission are the Coutumes d’Anvers2 and de Bruges respectively. But it pleased the wisdom of the Government to forbid the publication in the latter compilation of ‘le texte des sentences ou décisions particulières et les matiêres commerciales.’ Whereby, certain most interesting matter would have Edition: current; Page: [57] been lost to students of this generation, had not the distinguished German jurist Brunner appealed in the name of learning to the editor of the Coutumes de Bruges, Dr. Gilliodts van Severen, to save at least some fragments from the general fate. Dr. Van Severen, in reply, forwarded to Professor Brunner several manuscript copies of protocols recorded in connection with proceedings before the Town Council, or Schöffengericht,1 of Bruges, in the middle of the fifteenth century. These reports, long extracts from which have been published by Brunner in the Zeitschrift für Handelsrecht, are thus almost contemporaneous with the Lyons charter of Louis XI, and with the important Bolognese Ordinance of 1454,2 to be hereafter alluded to. The cases quoted by Brunner are interesting in all kinds of ways, but space forbids the quotation of more than one example.

Spinula v. Camby. Judgment of 29th March, 1448. Bernard and Matthias Ricy, at Avignon, on the 3rd June, 1439, gave a letter of exchange (fist ung change) to Cerruche, of Bardiz, for 450 florins. The bill was drawn on one Marian Rau, and was payable at Bruges to Bernard Camby (the defendant) and another. Marian Rau paid the defendant in full soon after the arrival of the bill at Bruges, but the defendant nevertheless ‘protested’ it for non-payment, and sent it back with the protest to Avignon. Thereupon the Ricys were compelled to pay the amount (presumably to Cerruche). Marian’s rights in the matter seem to have passed, in some unexplained way, to her brother Odo, who transferred them by a formal instrument (produced before the Court) to the plaintiff, Spinula. The latter brought his action against Camby to recover the amount paid him by Marian.

The defendant pleaded, first, that before the assignment to the plaintiff, Odo Rau had become bankrupt (estoit faillj), and that his goods and debts, therefore, belonged to his creditors rateably; second, that he had never had any dealings with Odo Rau, but that if the plaintiff would bring his action Edition: current; Page: [58] in the name of Marian, he would account as a good merchant should.

The court deputed certain of its members to consider the matter, and also took the advice of two merchants, one from Lucca, the other from Pisa, whom the parties had chosen as arbitrators. In its judgment it nonsuited the plaintiff, on the express ground that the attempted transfer to him of the rights of the Raus was worthless.1

The case is startlingly modern in some of its aspects. We have the modern bill of exchange, with presentation and payment. Evidently also the ‘protest’ was a fully recognised proceeding, for on its arrival at Avignon the Ricys acted upon it without any suspicion of the trick which had been played.2 And the recourse of the payee against the drawer, familiar also to modern law, is clearly admitted. The medieval aspects of the case are, of course, the refusal to recognise a written transfer of a chose in action, or, as the report puts it, droit et action, the existence (as in the earlier examples) of the four parties to the bill, and the reference to the Italian merchants.

Enough then has been said to prove the existence and legal recognition of bills or letters of exchange at the beginning of the fifteenth century. Minor points can be dealt with afterwards. We must now make an attempt to trace the biological development of the negotiable instrument.

It will hardly be disputed that the negotiable instrument of to-day still retains one of the most marked features of early law. It is one of the very few surviving instances of the formal contract. In spite of all modern legislation, in spite of the Zeitgeist and its dislike of formalism, it is still extremely dangerous to depart from the letter of precedent in negotiable paper. A glance at the examples of the fourteenth and fifteenth centuries is sufficient to show how slight are the changes in the form of a bill of exchange which the revolution of five centuries has produced.

But if in this one respect the negotiable instrument smacks of antiquity, in its more essential qualities it is wholly opposed to the spirit of early law. The alienability of rights in personam (to say nothing of proprietary rights) by simple endorsement or handing over of a document of title, the improvement of title by transfer, are very modern notions. It will be sufficient if we follow up the track suggested by the first of these qualities.

Choses in action are inalienable in early law for two reasons. In the first place the tribunals do not allow representation; or, in other words, the transferee is unable to enforce his claim because he is regarded by the court as a stranger to the proceedings. In the second, a chose in action does not permit of that corporeal and formal transfer which is essential to the legality of early conveyances. These two considerations give us the key to the history of negotiable instruments.

Primitive tribunals do not admit of representation. This is a rule with which every student of law is familiar. We need here only point out the extreme tenacity with which German Law held to the maxim.1 Even so late as the twelfth century, the clumsy Roman method of adstipulatio2 was used by the contracting party who wished to provide for the enforcement of his rights by a third person.

But there arrives a period in the history of every progressive people when this rule becomes a grievous nuisance, and all kinds of evasions are then attempted. According to the great authority of Brunner, modern Europe is indebted for the earliest successful efforts of this character neither to what we now call Germany,3 nor to France,4 but to the genius of the Lombard jurists, whose ideas, Teutonic in the main, differed in many important respects from those of the Transalpine Germans. Whether these differences, especially Edition: current; Page: [60] conspicuous in legal matters, were due to the geographical connection of the Lombards with the native soil of Roman Law, or to some race-peculiarity of the Lombard stock, is too great a question to be mooted here. Only it is of importance for English students never to forget the close affinity between the Anglo-Saxon and the Lombard, an affinity which shews itself in politics1 and law2 as well as in speech.

It is not, of course, to be expected that the earliest steps of a reform such as we are seeking should be found in legislation. Primitive legislators do not trouble themselves much about commercial convenience; they are even apt to look upon the rapid circulation of capital with grave suspicion. The art of the conveyancer, in which the Lombards were specially distinguished, is the origin of the reform.

Two great collections of early Lombard documents have recently been rendered accessible to the ordinary student. The first of these is the Memorie e Documenti per servire all’ istoria del Ducato de Lucca, the fifth volume of which contains a reprint of the cathedral documents of the 7th, 8th, 9th, and 10th centuries. During this period Lucca formed part of the princedom or duchy of Tuscany, itself a part of the Lombard Kingdom of Italy. Towards the close of the eighth century it became, of course, subject to the overlordship of the Frank empire; but the respect with which the conquerors treated Lombard institutions is well known.

The second collection is the recently edited Codex Cavensis, the reprint of the original deeds contained in the archives of the Cluniac monastery at La Cava, near Salerno, founded by Alferius Pappacarbone in the year 1011.3 Salerno, which had previously formed part of the Lombard principality of Beneventum, became in the year 843 (the year of the Treaty of Verdun), with the approval of its Frankish overlord, Ludwig the German, a separate duchy, and so remained until its conquest by Roger Guiscard in 1077. The only fact which Edition: current; Page: [61] makes against the character of the Codex as an exposition of pure Lombard practice, is the admittedly successful inroads of the Saracens into Southern Italy during the pre-Carolingian period. But it is unlikely that the Lombard lawyers would be seriously affected by Saracenic influence. Of course the bulk of the documents in both collections come long before the revival of the study of Roman Law in Italy.

Brunner arranges under four heads those clauses of the Lombard documents which aim at evading the strictness of the early law of transfer. But, as it is always an advantage to simplify classification where possible, we may be allowed to absorb his four classes into two, basing our arrangement rather on the nature of the object aimed at, than on the form of words by which that object is attained. Let it be understood that our examples are taken from all kinds of documents—gifts, sales, leases, bonds, and even wills.

Class I. Here the object of the conveyances is to provide specially for the enforcement of a right in personam, on behalf indeed of the grantee, but through the agency of a third person. This attempt gives rise to the two forms which Brunner has named (a) Exactionsklausel, and (b) Stellvertretungsklausel. The former runs thus:—per se aut per illum hominem cui ipse hanc cartulam dederit ad exigendum. It is found so far back as the year 771, in a curious document in which a monk makes over to a church (amongst other things) the right to avenge his death if he shall be murdered—i. e. (doubtless) the right to recover his wergild.1 A Lucchese document of the year 819 has a significant variation—aut ad illum homine(m) cui tu hanc pagina(m) pro animâ tuâ ad exigendum et dispensandum dederis.2 The et dispensandum, which appears again in a will of the year 836,3 refers to the dispensator, or clerical official who disposed of the deceased’s goods for the benefit of his soul. He forms an important link in the history of testamentary capacity. The Stellvertretungsklausel differs from the Exactionsklausel only in form. It runs—vel cui istum breve in manu paruerit in Edition: current; Page: [62] vice nostra, and is to be found in numerous examples of the La Cava documents, from the early ninth century onwards.1 The important point to notice about both these variations is that they treat the transferee as the agent of the original grantee, not as an independent acquirer.

Class II. Here we come upon a different plan, which evidently contemplates an actual transfer of the beneficial right. This group of clauses is named by Brunner the Inhaberklauseln, and is subdivided by him into alternative and pure. His meaning will be apparent in a moment if we take an example of each subdivision. The alternative Inhaberklausel reads thus—tibi aut eidem homini qui hunc scriptum pro manibus abuerit,2 or, mihi seu ad hominem illum, apud quem brebem iste in manu paruerit.3 It is found in the middle of the ninth century. The reine Inhaberklausel is not quite so old. The earliest example quoted by Brunner is under the year 962. It runs thus—(ad componendum) ad hominem aput quem iste scribtus paruerit,4 and it is noteworthy that the earliest examples are nearly all concerned with wills, or at least mortuary gifts.5 The transition from the alternative to the pure Inhaberklausel simply consists in omitting the name of the original stipulator, and the step is easily explained by the hypothesis that the latter form was first used in cases which, in the nature of things, the stipulator could not expect to enforce his own claim.

The first class of clauses, which we may call, for brevity’s sake, the ‘representative’ clauses, seem rarely to have been found north of the Alps. The Bolognese Ordinance of 1454 shows distinct traces of their influence in Italy when it says:—Et quod liceat cuicunque, cuius intersit, per se, vel alium legitime intervenientem dictas Scripturas Librorum (deposit receipts) petere executioni mandari contra Scribentem.6 And in the Stralsunder Stadtbuch for the years 1287-8 we get this interesting entry:—Ludekinus de Fonte dabit in Edition: current; Page: [63] festo beati Michaelis vel Gerardo dicto Repere uel suo nuntio cuicunque, dummodo apportaverit literam creditivam 10 mrc.1 But, with the greatest possible deference, it can hardly be said that the German phrase—wer diesen Brief mit ihrem Willen inne hat—conveys the full force of its alleged Latin equivalent—cui ipse hanc cartulam dederit ad exigendum. And of his alleged Stellvertretungsklausel—oder wer diesen Brief von ihretwegen inne hat2—Brunner quotes no example, though the Stralsund entry may perhaps be said to give us a German instance of the Stellvertretungsklausel.

Moreover, of the pure Inhaberklausel, which seems to possess no special advantage over the alternative form, there appear to be but few early examples either in France3 or Germany.4 The alternative Inhaberklausel, on the other hand, had established itself firmly in western and central Europe by the end of the thirteenth century. Sometimes it is in a Latin form—quos dabunt praedicto Radolfo vel alicui de concivibus nostris qui presentem literam presentavit coram nobis.5 But it soon acquires a vernacular familiarity—joft den ghenen die dese lettren bringhen sal,6 oder behelder des briefs,7 ou à celui qui cette lettre portera.8

Perhaps the most curious point about the Inhaber clauses is that there seems to have been no necessity for the transferee of the claim to prove his title. We are, of course, familiar with the presumption of modern law in favour of the holder of negotiable instruments. But it is a little startling to find, so early as the eleventh century, the guardianship of a widow passing from hand to hand with a document. Yet in the year 1036 a certain ‘comes Petrus’ by his will left the guardianship of his wife, and all belonging thereto, to his germani Malfred and John or illi viro cui Edition: current; Page: [64] scriptum in manu paruerit. Thirty years later, a certain clerk John appeared in court as guardian of the widow, and was accepted as such without a question on production of the document—in cuius manu, ut supra scriptum est, praedictum scriptum paruit.1 With regard to debts, we have an actual decision ad hoc in the fifteenth century, by the council of the famous city of Lübeck, the head of the Hanseatic League, and, by virtue of its appellate jurisdiction, the greatest authority on commercial law in Germany.

‘Herman Ziderdissen, burgher of Köln on the Rhine, appearing before the honourable Council at Lübeck, arrests Johan Cleitzen, burgher of the same, asserts and claims of him 100 Rhenish gulden, which the same Johan Cleitzen owed to Frank Greverôde, burgher of Köln, his heirs or holder of the letter (sînen erven ofte hebbern des brêves), and which the same John with his own hand, so he openly acknowledged and admitted, underwrote and with his signet sealed, which before the council at Lübeck was read, yet he refuses to pay the debt in arrear. Thereto Johan Cleitzen answers that Herman should shew his authority (macht) from Frank Greverôde. Thereupon the aforesaid Council at Lübeck decided that he has no right to it: As the letter contains the words “hebbere des brêves,” and he admitted that he had underwritten it, so must he answer thereto; if he has any objection to make, let it be brought forward as right is.’2

Here then is a clear recognition of the transferability of a bond with the alternative Inhaberklausel, at the end of the fifteenth century. Later on we shall see that there came a reaction in France which was not without its results. The English practice of the period seems to have been to make the bond payable to the original creditor vel suo certo attornato,1 Edition: current; Page: [65] and, to enforce this clause, Letters of Attorney, of which examples are given by Madox,2 were doubtless necessary. But it is time that we turn to the other side of the difficulty.

All early systems of law require for the transfer of rights a formal investiture or corporeal handling in the presence of the assembled community. Long after this corporeal transfer has become a mere form, symbolized by such survivals as the turf, clod, twig, knife, staff, &c., it continues to exercise a practical influence on conveyancing law. To the conservative force with which medieval Germany held to the Auflassung, a ceremony at first very real and practical, afterwards merely formal, modern Germany probably owes her important Grundbuch system.

It is, therefore, of great interest to notice that, while the other Teutonic races retained their symbolic investiture at least until the eleventh century, the Lombards, and their kindred Anglo-Saxons, had adopted the simpler and more modern form of traditio per cartam at a much earlier date. The Anglo-Saxon conveyance by boc or charter is found as early as the ninth century.3 In a Lombard document of the eighth century, to which we have previously referred, the donor of an advowson not merely transfers it by traditio cartae, but recites that he obtained his title in the same way.4 Perhaps the clearest evidence of the distinction is to be found in the directions to conveyancers contained in the Cartularium Langobardicum of the eleventh century.5 The imaginary pupil is directed to tradere per hanc pergamenam cartam venditionis (such and such land) ad Johannem, quod dehinc in antea a presenti die proprietario nomine faciat ipse et sui Edition: current; Page: [66] heredes aut cui ipse dederint. The same practice is to hold in the case of a Roman. But if the conveying party be a Salian, a Ripuarian, a Frank, a Goth, or an Alamman, the charter is to be placed on the ground, and upon it laid the knife, notched stick, clod, twig, &c.1 The purchaser then takes up the charter (levat cartam).

In some obscure way this peculiar difference appears to have connected itself with the early Lombard law of contract. Whatever may be the philosophical explanation of the appearance of the contract as a legal phenomenon, it is pretty certain that it represents historically a compromise between litigants, secured by oath, pledges, and (generally) hostages. The promisor is under no direct liability to the promisee; the latter must enforce his security either against the wadia or the fidejussores.2 The course of the Lombard law seems to have been this. Being familiar with the traditio per cartam in conveyances, it allowed the bond or document to act as the wadium in contracts. Naturally the particulars of the transaction are transcribed into the document, but the early cautio is not (according to the English dictum) the contract itself, nor even evidence of the contract, but, literally, the security for the contract.3 Two points illustrate this truth forcibly, and one of them is of direct interest for the history of negotiable instruments.

In the first place it will be observed that nearly all the early examples of cautio are penal stipulations. The Cartularium Langobardicum says expressly—Et in omnium fine traditionis adde: et insuper mitte poenam stipulationis nomine que est, &c.4 But we need not rely on dicta. The collections of Lucca and Salerno are full of eighth and ninth century examples.5 In fact we might almost lay it down that Edition: current; Page: [67] no transaction was completed at that time without a penal stipulation.

The other point to notice is the extreme care with which many early cautiones stipulate for the return of the document on payment. Of course this clause only occurs in actual bonds for the payment of money, not in conveyances containing merely penal stipulations. But as early as the time of the Angevin and Marculfian Formularies (seventh and early eighth centuries) we find the clause et caucionem meam recipere faciam,1 or even, cautionem absque ulla evacuario intercedente recipiamus.2 The evacuaria or Todbrief was a formal document cancelling a bond alleged by the person claiming on it to have been lost. There is an example so late as the fourteenth century,3 and as it was issued by the Duke of Austria himself (though he was only concerned in the matter as protector of the Jew creditor) we may gather that great importance was attached to the procedure. But, historically speaking, the stress laid upon the production of the cautio is easily demonstrable, and quite natural. Several of the Lombard documents of the ninth century make the express condition—et eam (paginam) nobis in judicio ostiderit,4 or, simply, et eam mihi ostenderit.5 If the creditor could not produce the pledge, the presumption was that he had realized on it; and, as the debtor was under no personal obligation to pay him, he naturally declined to do so except in return for his wadium.

It is hardly going too far to say that this is at least a plausible explanation of the doctrine of presentation. The necessity for the production of a bond (the profert of English law) had become established before the appearance of bills of exchange. Qui presentem literam presentaverit,6 joft den ghenen die dese lettren bringhen sal.7 Thus the existence of the fourth or presenting party, who appeared in our first Edition: current; Page: [68] examples,1 is amply accounted for. The praesenteerder and the meister van den brieff continue as separate persons in the Netherlands till the beginning of the seventeenth century.2

We have seen already that, by the end of the fifteenth century, presentation of Inhaberpapier was held to be sufficient without further proof of title. This had, probably, always been the Lombard rule, but the northern Germans had long held to the necessity for a special Willebrief, or documentary transfer. There was indeed a theory that this document must have three seals, that of the transferor and those of two witnesses.3 But the Lombard rule ultimately prevailed.

We have now arrived at the point at which biology passes into history. The mercantile world is familiar, in the middle of the thirteenth century, with bonds or acknowledgments of debts which, though given originally to A, can be enforced by B, upon his production of the original document, with or without document of transfer. In the middle of the fourteenth century the mercantile world is familiar with bills of exchange in the modern sense. How was the intermediate step taken?

Without professing any detailed knowledge of the transition process, it is possible for us to lay our hands on instruments which are clearly in the transition-stage. Let us read this document, dated 124⅞, from the archives of Marseilles:—

Ego W. de sancto Siro, civis Massilie, confiteor et recognosco vobis Guidaloto Guidi et Rainerio Rollandi, Senensibus, me habuisse et recepisse ex causa permutacionis seu cambh a vobis £216 13s. 4d., pisanorum in Pisis, renuncians,4 &c.; pro quibus £216 13s. 4d., dicte monete promicto vobis per stipulationem dare et solvere vobis vel Dono de Piloso vel Raimacho de Balchi consociis vestris vel cui mandaveritis 100l. turonensium apud Parisius in medio mense aprilis et omnes depensas et dampna et gravamina quae pro dicto Edition: current; Page: [69] debito petendo feceritis vel incurreritis ultra terminum supradictum credendo inde vobis et vestris vestro simplici verbo absque testibus et alia probatione; obligans, &c. Actum Massiliae juxta tabulas campsorum. Testes (4). Factum fuit inde publicum instrumentum.1

Thirty years later comes the following document from the archives of Köln:—

Walleramus dictus de Juliaco viris prudentibus et amicis suis carissimis, judicibus, scabinis, magistris civium et universis civibus Coloniensibus quicquid potest dilectionis et honoris. Significo vobis presentibus, quod ratum et gratum habeo, quod vos detis et assignetis centum marcas, quas michi solvere tenemini in festo beato Martini hiemalis nunc futuro, Friderico dicto Schechtere civi Coloniensi, et vos clamo per praesentes quitos et absolutos de solutione dictarum centum marcarum in dicto termine facienda. In cuius rei testimonium sigillum meum duxi praesentibus apponendum. Datum Colonie 6 kalendas Maii, anno Domini, 1279.2

Once more:—

Viris discretis dominis Hermanno et Thidemanno de Warendorp, consulibus Lubicensibus, Hinricus de Lon necnon Johannes Pape salutem in omni bono. Comparavimus et emimus de Henrico Longo, fratre Johannis Longi, 10 libras grossorum. Promittimus sibi solvere pro quilibet librum 9 marcas et 12 denarios in 14 die post visionem presentis. Petimus ut dictam pecuniam solvatis nomine praedicti Hinrici Johanni fratri suo. Valete semper. Datum in cena domini. Petimus, ut hiis et aliis bene persolvatur.3

This last example is of the year 1341, two years later than the first true Bill of Exchange quoted above.4 The Marseilles document is by far the most valuable, as it shows us, almost beyond a doubt, the nature of the process which was going on. The purchasers of the bill do not wish merely to change their money from Pisan to French coin; they wish also to have it remitted to Paris. W. de St. Cyr is a professional campsor or dealer in money, possibly with the actual Edition: current; Page: [70] right of coinage. He receives from Guidi and his partners a sum of Pisan money, and gives them, as we should say, a bill on Paris payable to order. The bill is attested by witnesses and becomes a public document (publicum instrumentum). The whole transaction is in striking accordance with the Piacenza Ordinance of 1391,1 which compels campsores to give a written acknowledgment to their depositors confessing that they have received the money deposited with them, and declaring that the acknowledgment, as well as the entries in the books of the campsores, shall be evidence in favour of the creditors, sicut crederetur et fides daretur si dicta scriptura et dicti libri essent solemne publicum instrumentum. Nothing could, in fact, be more tempting, and nothing more dangerous, than to treat the Bill of Exchange as the counterpart of the old Roman literal contract.

Of the endless points which present themselves with regard to the law of negotiable instruments in the Middle Ages, only one can be touched upon here. We have seen that, by the end of the fifteenth century, the holder of a bond or bill, containing the Inhaberklausel, was not obliged to show his title. Against this rather advanced doctrine the French writers of the sixteenth century protested, with remarkable success.2 Founding themselves on the maxim—un simple transport ne saisit point—and carefully cutting out the following words—sans apprehension—they succeeded in compelling the transferee of a bill of exchange to produce evidence of his title.3 This reactionary step seems to have led, in the first place, to the introduction of bills drawn in blank (promesses en blanc), which were used for the concealment of usurious transactions,4 and were on that account forbidden by various Parliamentary arrêtes of the early seventeenth century. Then recourse seems to have been had to the old French form of order or mandat—à son command, à son command certain,5 &c.—of which examples are found in the thirteenth century. Naturally this form required some evidence of title, but the Edition: current; Page: [71] practice of indorsement had fully established itself by the middle of the seventeenth century. The great Ordonnance de Commerce of 16731 distinguishes carefully between (a) endossement, the mere signature of the payee, which only made the holder an agent, and (b) ordre, containing the date and the name of the purchaser (qui a payé la valeur en argent, marchandise, ou autrement), which made the indorsee full owner, sans qu’il ait besoin de transport, ni de signification. How the practice of indorsement was introduced it is difficult to prove; but it is easy to see that the persistent use of the terms brief, lettre, might keep alive the idea of the original form of the document, and thus a writing which was, in effect, an address to a new holder, would come naturally where the address of a letter usually came—i. e. on the back. We have seen already, that in the earliest examples of bills of exchange the name of the drawee was indorsed.

This paper merely attempts to put together a few incidents in the early history of the negotiable instrument. It does not pretend to ascertain its origin. Claims have been made, with much plausibility,2 for a Jewish parentage; and Oriental evidence must certainly be examined with care before it is rejected. But such a task requires scholarship.

51.: PROMISSORY NOTES BEFORE AND AFTER LORD HOLT1

THE question of liability of a remote indorser of a promissory note, in Virginia, came before the court below, about a year before their decision in the present case. It was in the case of Dunlop v. Silver and others, argued at July term 1801, in Alexandria. The court took the vacation to consider the case, and examine the law, and, at the succeeding term, judgment was rendered for the plaintiff by Kilty, Chief Judge, and Cranch, Assistant Judge, contrary to the opinion of Judge Marshall. . . .

The plea was non assumpsit, and a verdict was taken for the plaintiff subject to the opinion of the court, upon the point, whether the holder could maintain an action against the remote indorser of a promissory note.

The statute 3 & 4 Ann. c. 9, respecting promissory notes, is not in force in Virginia; but there is an act of assembly, 1786, c. 29, by which it is enacted, that “an action of debt may be maintained upon a note or writing, by which the person signing the same shall promise or oblige himself to pay a sum of money, or quantity of tobacco, to another;” Edition: current; Page: [73] and that “assignments of bonds, bills and promissory notes, and other writings obligatory, for payment of money or tobacco, shall be valid; and an assignee of any such may, thereupon, maintain an action of debt in his own name; but shall allow all just discounts, not only against himself, but against the assignor, before notice of the assignment was given to the defendant.”

It will be observed, that this act gives no action against the indorser or assignor, nor does it make any distinction between notes payable to order, and those payable only to the payee. Hence, perhaps, it may be inferred, that it left such instruments as the parties themselves, by the original contract, had made (or intended to make) negotiable, to be governed by such principles of law as may be applicable to those instruments. At any rate, it seemed to be admitted, that the act did not affect the present case.

The principal question, then, is, whether this action could have been supported in England, before the statute of Anne.

I. In order to ascertain how the law stood before that statute, it may be necessary to examine how far the custom of merchants, or the lex mercatoria, was recognised by the courts of justice, and by what means the common-law forms of judicial proceedings were adapted to its principles. . . .

The custom of merchants is mentioned in 34 Hen. VIII., cited in Bro. Abr., tit. Customs, pl. 59, where it was pleaded, as a custom between merchants throughout the whole realm, and the plea was adjudged bad, because a custom throughout the whole realm was the common law. And for a long time, it was thought necessary to plead it as a custom between merchants of particular places, viz., as a custom among merchants residing in London and merchants in Hamburg, &c. By degrees, however, the courts began to consider it as a general custom. Co. Litt. 182; 2 Inst. 404. . . .

But after this, in the year 1640, in Eaglechild’s Case, reported in Hetly 167, and Litt. 363, 6 Car. I., it was said to have been ruled (in B. R.), “that upon a bill of exchange between party and party, who were not merchants, there cannot be a declaration upon the law-merchant; but there may be a declaration upon assumpsit, and give the acceptance of the Edition: current; Page: [74] bill in evidence.” This decision seemed to confine the operation of the law-merchant, not to contracts of a certain description, but to the persons of merchants: whereas, the custom of merchants is nothing more than a rule of construction of certain contracts. Jac. Law Dict. (Toml. edit.) tit. Custom of Merchants. Eaglechild’s Case, however, was overruled in the 18 Car. II., B. R. (1666), in the case of Woodward v. Rowe, 2 Keb. 105, 132, which was an action by the indorsee against the drawer of a bill of exchange. . . . It was afterwards moved again, that this “is only a particular custom among merchants, and not common law; but, per curiam, the law of merchants is the law of the land; and the custom is good enough, generally, for any man, without naming him merchant; judgment pro plaintiff, per totam curiam, and they will intend that he, of whom the value is said to be received by the defendant, was the plaintiff’s servant.” . . .

In the year 1760 (1 Geo. III.), in the case of Edie v. The East India Company, 2 Burr. 1226, Mr. Justice Foster said, “Much has been said about the custom of merchants; but the custom of merchants, or law of merchants, is the law of the kingdom, and is part of the common law. People do not sufficiently distinguish between customs of different sorts. The true distinction is, between general customs (which are part of the common law) and local customs (which are not so). This custom of merchants is the general law of the kingdom, part of the common law, and, therefore, ought not to have been left to the jury, after it has been already settled by judicial determinations.” . . . In the case of Pillans & Rose v. Van Mierop & Hopkins, 3 Burr. 1669, Lord Mansfield says, “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.” . . .

This chronological list of authorities tends to elucidate the manner in which the custom of merchants gained an establishment in the courts of law, as part of the common or general law of the land; and shows that it ought not to be considered as a system contrary to the common law, but as an essential constituent part of it, and that it always was of co-equal Edition: current; Page: [75] authority so far as subjects existed for it to act upon. The reason why it was not recognised by the courts, and reduced to a regular system, as soon as the laws relating to real estate, and the pleas of the crown, seems to be, that in ancient times, the questions of a mercantile nature, in the courts of justice, bore no proportion to those relating to the former subjects. . . .

Another reason, perhaps, why we see so much tardiness in the courts in admitting the principles of commercial law in practice, has been the obstinacy of judicial forms of process, and the difficulty of adapting them to those principles which were not judicially established, until after those forms had acquired a kind of sanctity from their long use. Much of the stability of the English jurisprudence is certainly to be attributed to the permanency of those forms; and although it is right, that established forms should be respected, yet it must be acknowledged, that they have, in some measure, obstructed that gradual amelioration of the jurisprudence of the country, which the progressive improvement of the state of civil society demanded. It required the transcendent talents, and the confidence in those talents, which were possessed by Lord Mansfield to remove those obstructions. When he ascended the bench, he found justice fettered in the forms of law. It was his task to burst those fetters, and to transform the chains into instruments of substantial justice. From that time, a new æra commenced in the history of English jurisprudence. His sagacity discovered those intermediate terms, those minor propositions, which seemed wanting to connect the newly-developed principles of commercial law with the ancient doctrines of the common law, and to adapt the accustomed forms to the great and important purposes of substantial justice, in mercantile transactions.

II. Forms of pleading often tend to elucidate the law. By observing the forms of declarations, which have, from time to time, been adapted, in actions upon bills of exchange, we may, perhaps, discover the steps by which the courts allowed actions to be brought upon them, as substantive causes of action, without alleging any consideration for the making or accepting them. The first forms which were used, Edition: current; Page: [76] take no notice of the custom of merchants, as creating a liability distinct from that which arises at common law; but by making use of several fictions, bring the case within the general principles of actions of assumpsit. The oldest form which is recollected, is to be found in Rastell’s Entries, fol. 10,(a) under the head “Action on the Case upon promise to pay money.” Rastell finished his book, as appears by his preface, on the 28th of March 1564, and gathered his forms from four old books of precedents, then existing. This declaration sets forth that

In the oldest books extant in the English language on the subject of the law-merchant, viz., Malynes’ Lex Mercatoria, written in 1622, and Marius’s Advice, which appeared in 1651, it is said, that regularly there are four persons concerned in the negotiating a bill of exchange. A., a merchant in Hamburg, wanting to remit money to D., in England, pays his money to B., a banker in Hamburg, who draws a bill on C., his correspondent or factor in England, payable to D., in England, for value received of A. But in the declaration above recited, there are five persons concerned; and if, as is supposed, that transaction was upon a bill of exchange, the fifth person must have been an indorsee, or assignee of the bill. Another reason for supposing this to be the case, is, that Rastell has no other form of a declaration by an indorsee, although he has two by the payee, viz., one against an acceptor and one against a drawer. . . .

These are the greater part of the precedents of declarations on bills of exchange, to be found in the printed books, before the statute of Anne; and in all of them, those facts are stated which bring the case within the principles which were considered as necessary to support the action of assumpsit, in general cases, at common law. In the more modern forms, the liability of the defendant, under the custom, is considered as a sufficient consideration to raise an assumpsit, without averring those intermediate steps which may be considered as the links of the chain of privity which connects the plaintiff with the defendant. The reason of this change of Edition: current; Page: [78] form was, probably, the consideration that those intermediate links were only fictions, or presumptions of law, which were never necessary to be stated. . . .

III. Having thus seen how the law-merchant was understood, at the time of the statute of Anne, and the manner in which it was applied to the forms of judicial process, it will now be necessary to inquire, at what time the law-merchant was considered as applicable to inland bills, and what was the law respecting such bills and promissory notes, prior to the statutes of 9 & 10 Wm. III., c. 17, and 3 & 4 Ann., c. 9.

It is not ascertained exactly at what time inland bills first came into use in England, or at what period they were first considered as entitled to the privileges of bills of exchange, under the law-merchant. But there was a time, when the law-merchant was considered as “confined to cases where one of the parties was a merchant stranger,” 3 Woodeson, 109; and when those bills of exchange only were entitled to its privileges, one of the parties to which was a foreign merchant. This seems to have been the case, at the time [1622] when Malynes wrote his Lex Mercatoria, in the 4th page of which, he says, “He that continually dealeth in buying and selling of commodities, or by way of permutation of wares, both at home and abroad in foreign parts, is a merchant.” It may be observed also, that Malynes takes no notice of inland bills; hence, we may presume, that they were not in use in his time. . . . In the case of Bromwich v. Loyd, 2 Lutw. 1585 (Hil., 8 Wm. III., C. B.) Chief Justice Treby said, “that bills of exchange at first were extended only to merchant strangers, trading with English merchants; and afterwards, to inland bills between merchants trading one with another here in England; and after that, to all traders and dealers, and of late, to all persons, trading or not.” And in Buller v. Crips, 6 Mod. 29 (2 Ann.), Lord Chief Justice Holt said, he remembered “when actions upon inland bills of exchange first began.”

Perhaps Lord Holt might have been correct as to the time when actions upon inland bills first began, or rather when the first notice was taken of a difference between inland and foreign bills; but it appears probable, that inland bills were in Edition: current; Page: [79] use much before Lord Holt’s remembrance. Marius first published his Advice concerning Bills of Exchange, in 1651, half a century before Lord Holt sat in the case of Buller v. Crips, as appears by Marius’s preface to his second edition; and he there says, he has been twenty-four years a notary-public, and in the practice of protesting “inland instruments and outland instruments.” In p. 2, speaking of a bill between merchants in England, he says, it is “in all things as effectual and binding as any bill of exchange made beyond seas, and payable here in England, which we used to call an outland bill, and the other an inland bill.” If we go back twenty-four years from 1651, the time when Marius first published his Advice, it will bring us to the year 1627; but if we go back twenty-four years from 1670, the probable date of his 2d edition (which was probably his meaning), it will give us the year 1646, as the earliest date to which we can trace them. As Malynes, in his Lex Mercatoria, of 1622, does not notice them, and as Marius mentions them as existing in 1646, it seems probable, that they began to be in use between those two periods. . . .

It is certain, that promissory notes were in use upon the continent, in those commercial cities and towns with which England carried on the greatest trade, long before that period; and were negotiable under the custom of merchants, in the countries from whence England adopted the greater part of her commercial law. They were called bills obligatory, or bills of debt, and are described with great accuracy by Malynes, in his Lex Mercatoria, p. 71, 72, &c., where he gives the form of such a bill, which is copied by Molloy, in p. 447 (7th edition, London, 1722), and will be found in substance exactly like a modern promissory note.

This is nothing more than a verbose promissory note, which, stripped of its redundancies, is simply this: For value received, I promise to pay to C. D., or bearer, 500l. in six months after date. . . .

As Malynes says nothing of inland bills, and yet is so very particular respecting promissory notes, the probability is, that the antiquity of the latter is greater than that of the former, and that they were more certainly within the custom of merchants. Indeed, there is a case prior to any in the books upon inland bills, which is believed to have brought upon such a promissory note, or bill obligatory, as is described by Malynes. It is in Godbolt 49 (Mich., 28 & 29 Eliz., Anno 1586),

Lord Ch. Baron Comyns, in his Digest, tit. Merchant, F. 1, F. 2, in abridging the substance of what Malynes had said upon the subject of bills of debt, or bills obligatory, does not hesitate to state the law to be, that “payment by a merchant shall be made in money or by bill. Payment by bill, is by bill of debt, bill of credit or bill of exchange. A bill of debt, or bill obligatory is, when a merchant by his writing acknowledges himself in debt to another in such a sum, to be paid at such a day, and subscribes it, at a day and place certain. Sometimes, a seal is put to it. But such bill binds by the custom of merchants, without seal, witness or delivery. So it may be made payable to bearer, and upon demand. So, it is sufficient, if it be made and subscribed by the merchant’s servant. So, a bill of debt may be assigned to another toties quoties. And now by the stat. 3 & 4 Anne, c. 9, all notes in writing, made and signed by any person, or the servant or agent,” &c. (reciting the terms of the statute). By thus arranging his quotations from Malynes under the same head Edition: current; Page: [81] with the statute of Anne respecting promissory notes, it is to be inferred, that he considered the custom of merchants, respecting bills of debt, as stated by Malynes, to be the cause or origin of the statute respecting promissory notes; and by connecting the former with the latter by the conjunction “and,” it seems to be strongly implied, that he considered the statute only as a confirmation of what was law before. That he was correct in this opinion, and that the foreign custom of merchants respecting promissory notes, mentioned by Malynes, was gradually and imperceptibly engrafted into the English law-merchant, at the same time, and under the same sanction with inland bills, and that that custom was acknowledged repeatedly by solemn legal adjudications in the English courts, before the statute of Anne, will probably be admitted when the authorities are examined, which will be presented in the following pages. A greater degree of weight will be attached to the opinion of Comyns, when it is recollected, that he was either at the bar or on the bench, during the reigns of King William III., Queen Anne, Geo. I. and Geo. II., and must, therefore, have known how the law stood before the statute, what motives produced it, and what was the true intent of the parliament in passing it. . . .

The time when inland bills and promissory notes began to be in general use in England, was probably about the year 1645 or 1646; and their general use at that time may be accounted for by the facts stated in Anderson’s Hist. of Commerce, vol. 1, p. 386, 402, 484, 492, 493, 519 and 520. In the year 1638 or 1640, King Charles forcibly borrowed 200,000l. of the merchants of London, “who had lodged their money in the king’s mint, in the tower, which place, before banking with goldsmiths came into use, in London, was made a kind of bank or repository for merchants therein safely to lodge their money; but which, after this compulsory loan, was never trusted in that way any more. Afterwards, they generally trusted their cash with their servants, until the civil war broke out, when it was very customary for their apprentices and clerks to leave their masters, and go into the army. Whereupon, the merchants began, about the year 1645, to lodge their cash in goldsmiths’ hands, both to receive and pay Edition: current; Page: [82] for them; until which time, the whole and proper business of London goldsmiths was, to buy and sell plate and foreign coins of gold and silver,” &c.

This short history of the goldsmiths will account for the sudden increase of paper credit, after the year 1645, and renders it extremely probable, that inland bills and promissory notes were in very general use and circulation. Indeed, we know that to be the fact, from the cases in the books; Edition: current; Page: [83] upon examining which, we shall find, that there was no distinction made between inland bills of exchange and promissory notes; they were both called bills; they were both called notes; sometimes, they were called “bills or notes.” Neither the word “inland,” nor the word “promissory,” was at this time in use, as applied to distinguish the one species of paper from the other. The term “promissory note” does not seem to have obtained a general use, until after the statute. There was no distinction made, either by the bench, by the bar, or by merchants, between a promissory note and an inland bill, and this is the cause of that obscurity in the reports of mercantile cases during the reigns of Charles II., James II., and King William, of which Lord Mansfield complained so much in the case of Grant v. Vaughan, 3 Burr. 1525, and 1 W. Bl. 488; where he says, that in all the cases in King William’s time “there is great confusion; for without searching the record, one cannot tell whether they arose upon promissory notes, or inland bills of exchange. For the reporters do not express themselves with sufficient precision, but use the words ‘note’ and ‘bill’ promiscuously.” This want of precision is apparent enough to us, who now (since the decision of Lord Holt in the case of Clerk v. Martin) read the cases decided by him before that time; but at the time of reporting them, there was no want of precision in the reporter, for there was not, in fact, and never had been suggested, a difference in law between a promissory note and an inland bill. They both came into use at the same time, were of equal benefit to commerce, depended upon the same principles, and were supported by the same law.

IV. The case of Edgar v. Chut, or Chat v. Edgar, reported in 1 Keb. 592, 636 (Mich. 15 Car. II., Anno 1663), seems to be the first in the books which appears clearly to be upon an inland bill of exchange. Without doubt, many had preceded it, and passed sub silentio. The case was this: A butcher had bought cattle of a grazier, but not having the money to pay for them, and knowing that the parson of the parish had money in London, he obtained (by promising to pay for it) the parson’s order or bill on his correspondent, a merchant in London, in favor of the grazier. The parson Edition: current; Page: [84] having doubts of the credit of the butcher, wrote secretly to his correspondent, not to pay the money to the grazier, until the butcher had paid the parson. In consequence of which, the London merchant did not pay the draft, and the grazier brought his suit against the parson, and declared on the custom of merchants. It was moved in arrest of judgment, that neither the drawer nor the payee was a merchant; but it was held to be sufficient, that the drawee was a merchant. . . .

The case of Shelden v. Hentley, 2 Show. 161 (33 Car. II., B. R., Anno 1680), was

Here, it will be observed, that the court, in order to elucidate the subject before them, refer to principles of law more certain and better known, viz., that a promissory note payable to bearer is good, and that promissory notes were within the custom of merchants. . . .

If any doubt could remain, that the case of Hill v. Lewis had fully settled the law, that promissory notes were within the custom of merchants, that doubt must have been completely removed by the case of Williams v. Williams, decided at the next term in the same year, in the king’s bench (viz., Pasch., 5 W. & M., Anno 1692), Carth. 269.

There cannot be a stronger case than this. On demurrer, judgment was rendered for the plaintiff in the king’s bench, which judgment was affirmed, upon argument, upon a writ of error in the exchequer chamber, on the very point of the custom; so that here was the unanimous concurrence of all the judges of England. This case, it is believed, has never been denied to be law, either before or since the statute of Anne. A short note of this case is to be found in 3 Salk. 68, by the name of Williams v. Field, in these words, “Ruled, that where a bill is drawn payable to W. R., or order, and he indorses it to B., who indorses it to C., and he indorses it to B., the last indorsee may bring an action against any of the indorsers, because every indorsement is a new bill, and implies a warranty by the indorser, that the money shall be paid.” . . .

Hawkins v. Cardy, in the next year (Mich., 10 Wm. III., B. R.), 1 Ld. Raym. 360; 1 Salk. 65; Carth. 466, was also upon a promissory note.

This, compared with Lord Raymond’s report of the case, shows what has been already so often mentioned, that no Edition: current; Page: [87] difference had yet been discovered between the law respecting promissory notes, and that concerning inland bills of exchange. Even Lord Raymond states it first to be a bill of exchange, and immediately shows it to have been a promissory note. So glaring a contradiction could not have passed uncorrected, if a promissory note and an inland bill of exchange had not been considered as the same thing. In this case, it will be remarked, that upon demurrer, the court said, that this declaration, upon the custom of merchants, on a promissory note, by the indorsee against the maker, would have been good, if the receipt of the 3l. 15s. had been acknowledged. . . .

We have now examined all the reported cases upon promissory notes, from the time of the first introduction of inland bills, to the time of Lord Holt’s decision in the case of Clerke v. Martin. At least, if any others are to be found, they have escaped a diligent search. They form a series of decisions for a period of more than thirty years, in which we discover an uncommon degree of unanimity as well as of uniformity. We find the law clearly established to be the same upon promissory notes as upon inland bills; and we find no evidence that the latter were in use before the former. There is not a contradictory case, or even dictum, unless we consider as such the doubt expressed in the case of Butcher v. Swift, cited by Comyns; but that case is not reported, and therefore, it is impossible to say, upon what ground the doubt was suggested. The cases upon promissory notes and inland bills go to establish not only their likeness in every respect, but even their identity; for the former are almost uniformly called inland bills.

V. Upon examining the printed books of precedents, during the above period, we shall find that the common usage was, to declare upon a promissory note, as upon an inland bill of exchange.

The first precedent of a declaration upon a promissory note is that in Brownlow, Latine Redivivum, p. 74, which is prior [1678] to any of the declarations upon inland bills of exchange. It is, in substance, as follows, that there is, and was, from time immemorial, a custom among merchants at Edition: current; Page: [88] the city of Exeter, and merchants at Crozict, that if any merchant at Crozict should make any bill of exchange, and by the said bill should acknowledge himself to be indebted to another merchant, in any sum of money, to be paid to such other merchant, or his order, and such merchant to whom the same should be payable, should order such sum to be paid to another merchant, and such merchant to whom the same was payable, should request the merchant who acknowledged himself so as aforesaid to be indebted, to pay such sum to such other merchant to whom he had ordered the money to be paid; and if, upon such request, the merchant who acknowledged himself to be indebted in the sum in such bill and indorsement mentioned, should accept thereof, then he would become chargeable to pay the said sum to the person to whom it was by the said bill and indorsement directed to be paid, at the time in the said bill mentioned, according to the tenor thereof. It then avers, that on the 8th May 1678, the defendant, according to the custom aforesaid, acknowledged himself to be indebted to one M. M. in 52s., which he obliged himself and his assigns (this is probably misprinted) to pay to the said M. M., who, by indorsement on the same bill of exchange, on —, at —, ordered the money to be paid to the plaintiff, which bill of exchange afterwards, to wit, on —, at —, the defendant saw and accepted, by which acceptance, and by the usage aforesaid, the defendant became liable, &c., and in consideration thereof, promised to pay, &c. There is, in the same book, p. 77, a declaration upon a bill of exchange at double usance, which is probably upon an inland bill, as the custom is alleged, generally, among merchants, but does not say at what place. . . .

In 2 Mod. Intr. 126, is another declaration upon the custom, by the indorsee against the maker of three promissory notes, dated in 1697. This declaration is precisely like a modern declaration upon a promissory note, excepting that the note is called a bill, and is said to be made and indorsed “according to the custom of merchants,” “whereby, according to the custom of merchants,” the defendant became liable, and so being liable, &c. In p. 122, is another by payee v. the maker of a promissory note, calling it a “bill or note,” and Edition: current; Page: [89] setting forth the custom specially. In every case upon a promissory note, the declaration is grounded on the custom of merchants.

Upon a review of this list of authorities and precedents, we are at a loss to imagine from what motive, and upon what grounds, Lord Holt could at once undertake to overrule all these cases, and totally change the law as to promissory notes: and why he should admit inland bills of exchange to be within the custom of merchants, and deny that privilege to promissory notes; when the same evidence which proved the former to be within the custom, equally proved that it extended to the latter. By examining the books, it will be found, that most of the points which have been decided respecting inland bills of exchange, have been decided upon cases on promissory notes. If he considered promissory notes as a new invention, when compared with inland bills of exchange, he seems to have mistaken the fact; for the probability is, that the former are the most ancient, or, to say the least, are of equal antiquity.

VI. But let us proceed to examine the case of Clerke v. Martin (Pasch., 1 Anne, B. R., 2 Ld. Raym. 757; 1 Salk. 129), upon which alone is founded the assertion in modern books “that before the statute of Anne, promissory notes were not assignable or indorsable over, within the custom of merchants, so as to enable the indorsee to bring an action in his own name against the maker.” The case is thus reported by Lord Raymond:

These five cases, viz., Clerke v. Martin, Potter v. Pearson, Burton v. Souter, Cutting v. Williams, and Buller v. Crips, are the only reported cases in which the former decisions were overruled, and it may be observed, that the four last were decided upon the authority of the first, which is to be considered as the leading case; and it is, in that case, therefore, that we are to look for the grounds upon which so great a change of the established law was founded. . . .

Hence, then, we find, from an examination of all the cases before the statute of Anne, that it never was adjudged, that a promissory note for money, payable to order, and indorsed, was not an inland bill of exchange. But we find, that the contrary principle had been recognised, in all the cases, from the time of the first introduction of inland bills and promissory notes, to the first year of Queen Anne, and that in one of them, it had been expressly adjudged, upon demurrer, in the king’s bench, and the judgment affirmed, upon argument, in the exchequer chamber, before all the judges of the common pleas and barons of the exchequer, so that it may truly be said to have been solemnly adjudged by all the judges of England. Principles of law so established, are not to be shaken by the breath of a single judge, however great may be his learning, his talents or his virtues. That Lord Holt possessed these in an eminent degree will never be denied; but he was not exempt from human infirmity. The report itself, in the case of Clerke v. Martin, shows that, from some cause or other, he was extremely irritated with the goldsmiths of Lombard street, and that his mind was not in a proper state for calm deliberation and sound judgment. The same observation applies to the case of Buller v. Crips, and is further confirmed, by that of Ward v. Evans, 2 Ld. Raym. 930, in which his lordship said, “But then I am of opinion, and always was (notwithstanding the noise and cry, that it is Edition: current; Page: [92] the use of Lombard street, as if the contrary opinion would blow up Lombard street), that the acceptance of such a note is not actual payment.” This circumstance has also been noticed by judges and others, in some of the more modern reports.

VII. From this concurrent testimony, it is apparent, that the case of Clerke v. Martin was a hasty, intemperate decision of Lord Holt, which was acquiesced in by the other judges, in consequence of his overbearing authority, “which made others yield to him;” and that he so “pertinaciously” adhered to his opinion, as to render it necessary to apply to parliament to overrule him. This, it is believed, is the true origin of the statute of Anne, which did not enact a new law, but simply confirmed the old; the authority of which had been shaken by the late decision of Lord Holt. This idea is confirmed by the words of the preamble of the statute, which are, “Whereas, it hath been held,” that notes in writing, &c., payable to order, “were not assignable or indorsable over, within the custom of merchants,” and that the payee could “not maintain an action, by the custom of merchants,” against the maker; and that the indorsee “could not, within the said custom of merchants, maintain an action upon such note” against the maker; “therefore, to the intent to encourage trade and commerce,” &c., be it enacted, &c., that all notes in writing made and signed by any person, &c., whereby such person, &c., shall promise to pay to any other person, &c., or his order, or unto bearer, any sum of money, &c., “shall be taken and construed to be, by virtue thereof, due and payable to any such person, &c., to whom the same is made payable;” “and also every such note, payable to any person,” &c., “or his order, shall be assignable or indorsable over, in the same manner as inland bills of exchange are or may be, according to the custom of merchants,” and that the payee “may maintain an action for the same, in such manner as he might do upon any inland bill of exchange, made or drawn according to the custom of merchants, against the person, &c., who signed the same.” And that the indorsee “may maintain his action,” for such sum of money, either against the maker or any of the indorsers, “in like manner Edition: current; Page: [93] as in cases of inland bills of exchange.” Here, it may be observed, that by using the words, “it hath been held,” the legislature clearly allude to certain opinions, which they carefully avoid to recognise as law. And in the enacting clause, they say, that such notes “shall be taken and construed to be due and payable,” &c., expressing thereby a command to certain persons, without saying expressly that the notes shall be due and payable, &c., for this being the law before, it was not necessary to enact the thing itself, but to instruct the judges how they should construe it. The mischief to be remedied was the opinion which had “been held,” not any defect in the law itself. By comparing this act with the cases decided prior to Clerke v. Martin, it will be found to contain no principles but such as had been fully recognised by the courts of law. It follows, therefore, that it was passed simply to restore the old order of things, which had been disturbed by Lord Holt.

The only real effect of the statute was to alter a few words in the declaration. The old forms allege that the defendant became liable by reason of the custom of merchants, the new say, that he became liable by force of the statute. Even Lord Holt himself always admitted, that an indebitatus assumpsit for money had and received, or money lent, would lie, and the note would be good evidence of it. His objections were only to the form of the action, and not to the liability of the parties. A promissory note was always as much a mercantile instrument as an inland bill of exchange, and there certainly seems to be more evidence that the former is within the custom of merchants than the latter, and that it was so, at an earlier period, on the continent of Europe, from whence it was introduced into England; and when introduced, it came attended with all the obligations annexed, which the custom had attached to it.

We, sometimes, in modern books, meet with an assertion that a promissory note was not negotiable at common law; this may be true, because a promissory note was not known at common law, if from the term common law we exclude the idea of the custom of merchants. It was a mercantile instrument, introduced under the custom of merchants. But if the custom Edition: current; Page: [94] of merchants is considered, as it really is, a part of the common law, then the assertion that a promissory note was not negotiable at the common law, is not correct. . . .

IX. The statute of Anne having put the question at rest, no one has taken the pains to examine the real state of the law, prior to the statute, but one writer after another has repeated the assertion, without the least examination. In England, it is of no importance, whether they are correct or not; but in this country, where few of the states have adopted the statute, it becomes interesting to know how the law really stood before. . . .

The observations in these cases from Virginia, respecting promissory notes, may be reduced to three propositions. 1st. That promissory notes were not negotiable, before the statute of Anne, so as to enable the indorsee to bring an action in his own name. 2d. That the act of assembly, by assimilating notes to bonds, shows an intention in the legislature to restrain the negotiability of both within the same limits. 3d. That the negotiability given by the act of assembly to bonds and notes was not “intended for purposes of commerce.”

The first of these propositions is clearly incorrect. It never was doubted, until the case of Clerke v. Martin, in the first year of Queen Anne, that a promissory note was a bill of exchange, even between the payee and the maker. . . .

The second proposition, that the act of assembly, by assimilating notes to bonds, intended to restrain their negotiability within the same limits, contains an argument which, if used at the trial, was not much insisted on, but which seems to be the only ground upon which a doubt can be supported. . . .

In Pennsylvania, a number of cases have occurred, from the whole of which it appears doubtful, whether the statute of Anne is to be considered as having been extended in practice to that state, or whether their actions upon promissory notes are grounded upon the custom of merchants. Their act of assembly of 28th May 1715, seems to have been passed in the full contemplation of the statute of Anne, but it provides a right of action only for the indorsee against the maker, and that only to recover so much “as shall appear to be due at the time of the assignment, in like manner” as the payee Edition: current; Page: [95] might have done. But it gives no action to the payee against the maker, nor to the indorsee against any of the indorsers. . . .

In the subsequent case of McCulloch v. Houston, in the supreme court of Pennsylvania, 1 Dall. 441, Chief Justice McKean was of opinion, that the legislature intended to put promissory notes on the same footing as bonds, at least, so far as to admit the equity of a note to follow it into the hands of the indorsee. He says, “before this act, it appears, that actions by the payee of a promissory note were not maintained, nor can they since be maintained, otherwise than by extending the English statute of Anne.” And to account for this extension of the statute, he supposes, “that actions upon promissory notes were brought here, soon after the passing of the statute, by attorneys who came from England, and were accustomed to the forms of practice in that kingdom, but did not perhaps nicely attend to the discrimination with regard to the extension, or adoption, of statutes.” But this could not have happened in the course of ten years, so as to have established a practice; for we are first to suppose a practice in England under the statute, a subsequent removal of attorneys from England to Pennsylvania, and then a practice in Pennsylvania to be established, and all this between the passing of the statute of Anne in the year 1705, and the act of assembly in 1715. A more probable conjecture seems to be, that the first settlers who came over from England about the year 1683, were well acquainted with the use of promissory notes, and the laws respecting them, as they had been practised upon in that country, for at least thirty years. The first emigrations to Pennsylvania were about the time when the banking business of the goldsmiths was at its greatest height, and it was fifteen or twenty years after the first settlement of Pennsylvania, before a doubt was suggested, whether an action would lie on a promissory note, as an instrument. Hence, it is probable, that actions on such notes were brought in the same manner as they had been used in England, to wit, on the custom of merchants; and upon that ground, and not upon the statute of Anne, probably rests the present practice in Pennsylvania.

The practice in New Hampshire and Massachusetts seems to have the same foundation. They declare upon promissory notes, as instruments, and rely upon the express promise in writing, without alleging a consideration, or referring to any statute or custom whereby the defendant is rendered liable, without a consideration. In Connecticut, it is said by Swift, in his System of the Laws, that the indorsee must sue in the name of the payee; but the payee can maintain an action upon the note, without alleging any custom, or statute or consideration. In New York, they have nearly copied the statute of Anne, as far as it relates to promissory notes, but how the law was considered, before their act of assembly of 1788, we are not informed. In Maryland, the statute of Anne was considered as in force and always practised upon. Their declarations have been precisely in the English form, alleging the defendant to be liable by force of the statute, and the courts have strictly adhered to the adjudications in England. Hence, nothing conclusive can be inferred from the practice of the states.

The third proposition drawn from the reported cases in Virginia is, that the negotiability given to bonds and notes by the act of assembly of that state, was not intended for purposes of commerce. It seems difficult to assign a reason why the legislature should have made bonds and notes assignable, unless it was to enable people to transfer that kind of property which existed in such bonds and notes; and the transfer of property is the only means of commerce. . . . If, therefore, for the purposes of commerce, the legislature intended to make those contracts negotiable, which were not so, either in their nature or by the consent of the parties, it is fair to presume, that they did mean to impede the negotiability of such as were in their own nature negotiable, and were expressly intended to be made so, by the will of the contracting parties? If there were any principles of law which would support the negotiability of a promissory note, payable to order, it cannot be supposed, that the legislature intended, by implication alone, to obstruct their operation. And even admitting that they did not, by the act making bonds and notes assignable, mean, to aid commerce, yet it Edition: current; Page: [97] cannot be presumed, that they intended to wage war with those commercial principles which were already established.

This brings us back again to the first inquiry, what were the principles upon which the negotiability of promissory notes was supported, before the statute of Anne? If such principles did exist, there seems to be nothing in this act of assembly which prevents their full operation in Virginia.

52.: THE EARLY HISTORY OF INSURANCE LAW1

IT seems so highly improbable that the practice of insurance, now deemed indispensable to the safe conduct of commerce on sea or land, should have been unknown to the Phœnicians, Rhodians, Romans and other ancient commercial peoples, that scholars have subjected ancient writings to the closest scrutiny in the effort to find in them some evidence that insurances were made in early times. The result has been the discovery of accounts of certain transactions which bear such a resemblance to insurance as to have led not a few scholars to the conclusion that insurances were known to the ancients, although the business of underwriting commercial risks was probably not highly developed. Foremost among these writers championing the ancient origin of insurance is Emérigon, whose brilliant and learned Traité des Assurances, first published in 1783, is still read with respect and admiration by all students of the subject, and cited as authority in the courts of all civilized countries. In this country the same view has been advocated by Justice Duer, whose discriminating and scholarly Lectures on Marine Insurance were published in 1845, and there are not wanting recent text-writers to reach the same conclusion.3 The contention that Edition: current; Page: [99] insurance was known to the ancients rests mainly upon certain passages found in the histories of Livy and Suetonius and in the letters of Cicero. Livy tells us that the contractors who undertook to transport provisions and military stores to the troops in Spain stipulated that the government should assume all risk of loss by reason of perils of the sea or capture.1 In the second passage from Livy,2 which gives in detail an account of the extensive frauds practised by one Postumius upon the country during the Second Punic War by falsely alleging that his vessels, engaged in the public service, had been wrecked, or by making false returns of the lading of old hulks that were purposely wrecked, it seems to be taken as a matter of course that the government was liable to make good such losses.3

Suetonius, in his life of Claudius, states that that emperor, in order to encourage the importation of corn, assumed the risk of loss that might befall the corn merchants through perils of the sea.4 This passage alone was sufficient to comvince Malynes that Claudius “did bring in this most laudible custom of assurances.”5

Likewise many writers have thought that Cicero refers to a transaction of commercial insurance when he writes to Caninius Sallust, proquæstor, that in his opinion sureties should be procured for any public moneys sent from Laodicea, in order that both he and the government should be protected from the risks of transportation.6 These passages, of doubtful significance when read in connection with the well-known Edition: current; Page: [100] fact that the rules of general average, and bottomry and respondentia loans, transactions closely related to insurance, were familiar to the ancients,1 have been considered by these writers adequate evidence that insurance was at least known to the commercial peoples of the ancient world.

On the other hand, a great number of writers on insurance consider that these passages refer to other transactions than insurance, and conclude that insurance was wholly unknown among the ancients. Among these are Grotius2 and Bynker-shoek3 on the Continent, and Park,4 Marshall and Hopkins in England.

This conflict of opinion as to the practice of insurance among the ancients is due largely to the fact that some writers restrict the significance of the term “insurance” more narrowly than others. The fact that we find no trace of the insurance contract in the laws of Rome or of any of the other ancient peoples, indicates unquestionably that if the contract of insurance, as known in modern times, was known to the ancients at all, its practical use was so little developed as to have made it insignificant. But if the term Edition: current; Page: [101] “insurance” be given a broader significance and made to include any kind of conventional arrangement by which one or more persons assume the risk of perils to which others are exposed—that is, an arrangement for aiding the unfortunate—then it is equally unquestionable that insurance is as old as human society itself. Friendly societies organized for the purpose, among others, of extending aid to their unfortunate members from a fund made up of contributions from all, are as old as recorded history. They undoubtedly existed in China and India in the earliest times.1 Among the Greeks these societies, known as Eranoi and Thiasoi, are known to have existed as early as the third century before Christ.2 These Grecian societies were largely religious and ritualistic, but among their chief functions, we learn, was that of providing for the expense of fitting burial for members. Similar societies, called Collegia, existed in Rome, where their establishment was attributed to Numa. These also performed many of the functions of benefit insurance societies, providing succor for the sick and aged members, and burial for those deceased.3 These Roman Collegia fell into disfavor Edition: current; Page: [102] under the emperors, but nevertheless continued to exist, with restricted functions and influence, up to the time of the fall of the Empire, and it is probable that their existence was continued in spite of the disorder due to the numerous invasions of Italy until they reappeared in history as the mediæval guilds.1 Of this, however, there is no documentary proof. It is certain that the guilds, which throughout Europe became so numerous and influential from the eleventh to the eighteenth centuries, possessed very many of the characteristics of the modern mutual benefit association, and, as such, carried on a primitive kind of insurance against the misfortunes incident to sickness and old age.2

In England, these guilds existed among the Saxons before the Conquest. We learn that among the purposes of these Saxon guilds was to provide for any member who had had occasion to take the life of anyone, the wergeld, or indemnity that, under the Saxon law, was payable to the family of the person slain.3 It seems that these guilds, in addition to providing, by contribution of the members, aid for the sick and burial of the dead among their number, also furnished indemnity to those who had suffered loss by fire or theft.4 After the Conquest, the English guilds became numerous and influential. Of one of these, the Guild of St. Katherine, Aldersgate, we learn that the brethren assisted any member if he “falle in poverte, or be aneantised thorw elde or thorw Edition: current; Page: [103] fyr oder water, theves or syknesse.”1 Thus we perceive that what are now termed sick benefit insurance and burial insurance have existed from time immemorial, and that, while many of the benevolences of these fraternal associations were charitable merely, yet there is to be found in their history distinct evidence of contractual insurance, and even of mutual fire insurance.

In like manner there may be included under the broad definition of insurance given above agreements made by governments, whether through the medium of enactments or through private contract, in accordance with which indemnity is provided for those who suffer loss from peculiar perils. Such just and proper provisions for the protection of the citizen rendering service to the government are doubtless of great antiquity. As stated above, Livy speaks of the practice whereby the Roman Republic indemnified those engaged in transporting military supplies for losses suffered by perils of the sea or acts of the enemy, as one long established and unquestioned.2 This undoubtedly was insurance in a limited sense. Indeed, we have evidence that a sort of government insurance was practised in times much earlier than those of which Livy wrote. In the Code of Hamurabi, 3which must have been enacted at least as early as 2250 bc, we find a provision that a city in which any man should be robbed of his property should be under obligation to indemnify him for his loss, while if the city and governor permitted such disorder that a person lost his life, the family of the murdered man were entitled to be indemnified from the public treasury.

Furthermore, bottomry and respondentia bonds and the allowing of general average in case of shipwreck and the jettison of the goods of one or more of the joint adventurers, may well be included under the term insurance in its broadest significance, and these were unquestionably known and much used among the ancients, particularly among the Rhodians. The lender of money in bottomry who could claim the repayment of his loan only if the vessel upon whose bottom the Edition: current; Page: [104] loan was made completed the contemplated voyage in safety, was entitled, not merely to the current rate of interest on the money loaned, but also to an added sum which would compensate him for the risk he ran of losing his whole principal, and which, in reality, represented the premium paid upon the risk assumed.1 We therefore conclude that the principle of insurance, considered as an arrangement whereby a person subjected to any peril may be indemnified for loss on account of such peril, was known to the ancients and made use of by them to a very considerable extent; but that commercial insurance, as practised so extensively in modern times, was either unknown to them or little used.

We are, therefore, safe in concluding that the practice of insurance as an important element of commerce and social economy, has had its origin in relatively recent times, but we cannot with any accuracy fix the date of its beginning nor determine indisputably what city or country is entitled to the credit of having originated it. Some scholars have professed to discover evidence that commercial insurance was first developed in Portugal, while some others favor Spain and Flanders.2 More recent research, however, made among the ancient records of the Chamber of Commerce of Florence has established satisfactorily that insurance had its origin in the great commercial cities of Northern Italy, where it must have been in common use among the merchants engaged in carrying on the large foreign trade of those cities as early as the beginning of the fourteenth century, and possibly more than a century earlier.3 Among the records of the Edition: current; Page: [105] Florentine Chamber of Commerce are the books of Francesco del Bene and Company, of Florence, which set forth commercial transactions dating from ad 1318. In these books are recorded the items of expense incident to trade in Flemish cloth and other articles. Among these items one frequently finds the cost of insuring the goods in transit.1 From the character of the references to insurances thus made, we can readily infer that as early as 1318 the custom of making insurances upon goods subject to peril of transportation either on sea or land had become a customary incident of traffic. This fact justifies the conclusion that among these Italian cities insurance had been in use many years before the date of the entry in these old Florentine books. The earliest policy of insurance now extant was made in Genoa in the year 1347. This quaint old document which, it will be observed, was in the form of a promise to repay a fictitious loan upon the happening of any misfortune to the vessel insured,2 is set forth in all of its barbarous Latin in the note below.3 The first certain record of an insurance transaction Edition: current; Page: [106] at Bruges is of the year 1370, but the policy in question was evidently issued by a Genoese underwriter.1 The earliest trustworthy evidence of the practice of insurance at Barcelona is found in certain ordinances of the City of Barcelona, published in 1435, which contain extensive provisions for the regulation of marine insurance.2 The particularity of these regulations shows clearly that the practice of insurance had already become extensive and of much importance in the commercial life of the Catalonian city some time before the date mentioned, but it is hardly probable that it antedated the similar practice in the Italian cities, which, as we have seen, certainly existed considerably more than a century earlier than the date of the Barcelona ordinances. Another positive reason for thinking that insurance was of later development in Barcelona than in the Italian cities is found in the earliest extant edition of the Consolat de Mar, known to have been published at Barcelona in 1494. This celebrated collection Edition: current; Page: [107] of sea laws, which under its Italian name of Consolato del Mare, had for three centuries such wide currency throughout Europe, and which is generally believed to have been first published in Barcelona as early as the middle of the thirteenth century, contains no reference whatever to insurance.1

It has been generally believed that the contract of insurance was first used in underwriting marine risks, and it is indisputable that it had its earliest and most important development in connection with maritime interests. Nevertheless, it is interesting to observe from these ancient books of Francesco del Bene and Company, the Florentine merchants already referred to, that as early as 1318 insurances were customarily made against loss by reason of dangers incident to land transportation, as well as to that by sea, and that shipments of specie were also at that early day insured just as in modern times.2

The daring and adventurous merchants of the Italian cities carried on extensive commerce with all of civilized Europe, and during the fourteenth and fifteenth centuries their practice of insuring their ventures spread with their trade to every considerable trading town of the Continent and of England. The usages of insurance, therefore, readily took on the same international character that had already been impressed upon the other customs of traders engaged in international mercantile pursuits. The usages governing the older forms of commerce, especially maritime usages, had found expression in collections of regulations and ordinances of great antiquity, that came to possess the greatest authority throughout Europe rather by their general acceptance than by force of authoritative enactment. These “sea laws,”3 as they were known, had their origin much earlier Edition: current; Page: [108] than the beginning of the practice of insuring ventures at sea, for otherwise they would not have been silent on so important an adjunct to successful commerce. But their existence undoubtedly greatly facilitated the rapid growth of a body of international insurance customs, which soon became incorporated with the greater body of commercial usages and became an integral part of the law merchant, having the same sanctions and enforced through the same procedure before conventional merchant courts.

As early as 1411 the business of making contracts of insurance had become of sufficient importance among the Venetians to attract legislative action, for on May 15th of that year we find that an ordinance was passed condemning and prohibiting the prevalent practice among Venetian brokers of underwriting foreign risks. But it is evident that underwriters did not at that early day regard insurance regulations with any greater respect than do their successors of the present time, for in June, 1424, another ordinance again prohibited insurances upon foreign vessels or goods, the preamble carefully explaining that an added reason for not underwriting such risks lay in the fact that war was raging between the Genoese and the Florentines and Catalonians, on which account the Venetians should refrain from aiding any of the belligerents. After this insurance became a favorite subject for regulation, often of a very drastic character. From the texts of these ordinances it is evident that in Venice the business of underwriting early became localized, just as in London it was carried on in Lombard Street, for in these Venetian ordinances it was usually provided that they should be read at noon on the “Street of Insurances at the Rialto.”1

In 1435 insurance ordinances, still extant, were published at Barcelona. As already stated, the edition of the Consolat de Mar published at Barcelona in 1494 contained no reference to insurance, nor did the Laws of Wisby or of the Hanse Edition: current; Page: [109] Towns, which, though of earlier origin, were published probably about this same time. It seems that these laws of the northern commercial cities were little more than adaptations of the much earlier laws of Oleron, which likewise make no mention of insurance. In 1647 there was published at Bordeaux Cleirac’s Us et Coustumes de la Mer, which contained the text of the Guidon de la Mer. This famous treatise on sea laws, which was compiled by some unknown author of Rouen between the years 1556-1600, treated extensively of marine insurance. In 1681 the Marine Ordinances of Louis XIV were published. These ordinances, supposed to be largely the work of Colbert, Louis XIV’s gifted Minister of Finance, provide for the regulation of the business of insurance with a completeness of detail that speaks clearly both of the importance of commercial insurance at that time and of the age and extent of the practice that could make such detail possible. Additional evidence of the important place assumed by insurance during the sixteenth century is found in the publication of treatises on insurance by Santerna1 in 1552 and by Straccha2 in 1569. The excellent treatise of Roccus, an eminent jurist of Naples, was not published until 1655, much later than the first English treatise by Gerard Malynes, which first appeared in 1622.

The introduction of the practice of insurance into England is shrouded in the same obscurity that envelops its origin on the Continent. Gerard Malynes, in his quaint treatise on the law merchant, published in 1622, asserts that policies of insurance were written in England at an earlier date than in the Low Countries, and that in fact Antwerp, then in the meridian of its glory, learned the practice of insurance from London. This conclusion he reached through the wording of the policies issued at Antwerp, which “do make mention that it shall be in all things concerning the said assurances as was accustomed to be done in Lombard Street, in London.” Malynes’ reasoning is far from convincing, and his conclusion is probably incorrect. It is highly probable, however, that Edition: current; Page: [110] the enterprising Lombards who had taken up their residence in London, in many cases as representatives of Italian trading houses, did not long delay in bringing to England the device of having their commercial ventures assured by underwriters which had proved so advantageous to the trade of their Italian associates. The activity of these London Lombards was so great as to give a name to Lombard Street,1 where they dwelt and carried on business as pawn-brokers, goldsmiths and importers of foreign goods. That the introduction of insurance into England is to be attributed to Italians there resident is not only highly probable in itself, but is also supported by much circumstantial evidence. Thus one of the clauses of the modern Lloyds’ policy provides that the policy “shall be of as much force and effect as the surest writing or policy of assurance heretofore made in Lombard Street.” We know also that the earliest policies issued in London of which we have any certain knowledge were written in Italian with English translations attached.2

The first certain record of an insurance transaction in England is found in the report of the case of Emerson c. De Sallanova,3 determined in a court of admiralty in 1545. Curiously enough the insurance involved in this proceeding was not against the perils of the sea, as might have been expected, but against possible loss consequent upon the withdrawal by the King of France of a safe conduct. The oldest English policy extant, dated September 20, 1547, is set forth in both Italian and English in the report of Broke c. Maynard, an admiralty cause.4 The copy of this policy is much mutilated, but a somewhat similar policy involved in Cavalchant c. Maynard, bearing date only a year later, is found in good condition among the records of the proceedings in admiralty. The English version of this venerable instrument is given in the note below.5

It is evident that prior to the time of Lord Mansfield’s accession to the bench, the development of insurance law in England followed the same lines as that of the other branches of the law merchant. It was generally understood that the common law courts, which did not recognize the quasi-international customs of merchants, afforded no fit forum for the determination of causes between merchants. Hence all early insurance disputes must have been settled by conventional merchant courts or arbitrators, who, it seems, might be appointed, upon petition, by the Privy Council, the Lord Mayor of London, or by the Court of Admiralty. Thus, in the record of the proceedings before admiralty prior to 1570 we find a petition by the owner of insured goods asking that arbitrators be appointed and the underwriters made to pay, “forasmuche as your said rater hath noe remedye by the ordre and course of the common lawes of the realme, and that the ordre of insurance is not grounded upon the lawes of the realme, but rather a civill and maritime cause to be determined and decided by civilians, or else in the highe courte of Admiraltye.”1

There were evidently numerous disputes about the payment of insurances, and there were probably many cases in which the underwriters refused to perform the judgments of the merchant courts, whose great weakness lay in the lack of a sheriff, for in the admiralty records for the year 1570 is found a petition on behalf of certain foreign merchants who complained that they could not get their insurance paid. In the same year there was an application by an “Easterling” for the appointment of arbitrators “forasmuche as the matter consistethe muche upon the ordre and usage of merchantes Edition: current; Page: [112] by whom rather than by course of law yt may be forwarded and determyned.” It is noteworthy that when the Court of Admiralty made the reference, the commission to hear the case ran to certain English and foreign merchants.1

The extracts just given from the admiralty records show that the inability of the conventional merchant courts to enforce their judgments compelled the merchants and underwriters to seek more formal and efficient tribunals before which to bring their causes. They first turned to the courts of admiralty, which easily assumed jurisdiction of maritime and foreign contracts of insurance, and readily took cognizance of the customs of merchants. But for some reason, not easily understood, the courts of admiralty did not prove satisfactory tribunals for the determination of insurance causes, and relatively few of such causes were brought before them.2 Lord Coke’s misleading report of Crane v. Bell,3 a case decided in 1546, has been the source of several mistaken statements that the writ of prohibition granted in that case by a common law court took away from the admiralty courts all jurisdiction of insurance questions.4 As a matter of fact, however, Crane v. Bell had nothing to do with insurance,5 and we know that admiralty courts still heard insurance cases for nearly half a century after the date of that case.6

Whatever may have been the cause, it is clear that the admiralty judges contributed little to the development of insurance law, and that during the latter part of the sixteenth century litigants sometimes felt compelled to carry insurance causes to the common law courts, in some cases even after they had been heard and determined by merchant courts. Lord Coke’s report of Dowdale’s Case7 refers to Edition: current; Page: [113] an action brought in a common law court on an insurance policy in 1588. But manifestly the common law courts of that day, with their highly technical and tedious rules of procedure, as governed by precedents of agricultural rather than mercantile origin, were ill adapted for the settlement of merchants’ disputes. Thus it appears that at the beginning of the seventeenth century persons having insurance causes were without a satisfactory tribunal for their determination. The conventional courts could not enforce their judgments, the courts of admiralty had proved inadequate, possibly because of the vexatious jealousy of the common law courts in unreasonably restricting their jurisdiction, while the common law courts were wholly unfit. The merchants and underwriters naturally sought relief from Parliament, and secured, in 1601, the first English insurance act,1 “for the obtaining whereof,” wrote Malynes, “I have sundry times attended the committees of the said Parliament, by whose means the same was enacted not without some difficulty; because there was [sic] many suits in law by action of assumpsit before that time upon matters determined by the Commissioners for Assurances, who for want of power and authority could not compel contentious persons to perform their ordinances; and the party dying, the assumpsit was accounted void in law.” The preamble of this act is exceedingly interesting, since it not only shows the great importance of the business of insurance at the time of its enactment, and a remarkably clear understanding of the real nature of insurance, but it also gives in striking summary the history of insurance law and practice during the preceding century, which necessitated the establishment of the court created by the act. This preamble, in part, is as follows:

2“(2) And whereas it hath been time out of mind an usage amongst merchants, both of this realm and of foreign nations, when they make any great adventure, (especially into remote parts) to give some consideration of money to other persons (which commonly are in no small number) to have from them assurance made of their goods, merchandizes, ships and things Edition: current; Page: [114] adventured, or some part thereof, at such rates and in such sort as the parties assurers and the parties assured can agree, which course of dealing is commonly termed a policy of assurance; (3) by means of which policies of assurance it cometh to pass upon the loss or perishing of any ship, there followeth not the undoing of any man, but the loss lighteth rather easily upon many than heavily upon few, and rather upon them that adventure not than those that do adventure, whereby all merchants, especially of the younger sort, are allured to venture more willingly and more freely; (4) and whereas heretofore such assurers have used to stand so justly and precisely upon their credits, as few or no controversies have arisen thereupon, and if any have grown, the same have from time to time been ended and ordered by certain grave and discreet merchants appointed by the lord mayor of the city of London, as men by reason of their experience fittest to understand, and speedily to decide those causes, until of late years that divers persons have withdrawn themselves from that arbitrary course, and have sought to draw the parties assured to seek their monies of every several assurer, by suits commenced in Her Majesty’s courts, to their great charges and delays.”

By the provisions of this act authority was given to the Lord Chancellor or to the Lord Keeper of the Great Seal, to issue commissions directed to “the judge of the admiralty for the time being, the recorder of London for the time being, two doctors of the civil law, and two common lawyers, and eight grave and discreet merchants, or any five of them,” with authority to hear and determine in a summary manner insurance causes. This court of insurance commissioners did not, however, prove successful, owing to the fact that its jurisdiction was confined to causes arising on policies issued in London, and construed not to extend to any other insurances than those on goods. The court was also held to be open only to the insured and not to the underwriter, and its judgments could not be pleaded in bar to a subsequent action at law.1 We are not surprised, therefore, to learn that this Edition: current; Page: [115] special court lapsed into disuse, and died of inanition within a century after its creation.

The failure of this special court seems to have discouraged any further attempts to better an almost intolerable situation, for the hundred and fifty years intervening between the enactment of 43 Eliz. and the appointment of Mansfield as Chief Justice of the Court of King’s Bench are almost a barren waste as far as the history of the development of insurance law is concerned. The common law judges did not grow in wisdom or in the favor of those having insurance causes. The merchants and underwriters continued to submit their disputes to arbitrators and commissions, sedulously avoiding the common law courts. It is said that, all told, the reported insurance cases determined at law prior to Lord Mansfield’s time did not exceed sixty in number,1 nor among these can there be found one that clearly establishes a great principle or that can be fairly considered a leading case. So slight was the grasp of the common law judges of this period upon the nature and true function of the contract of insurance that as late as 1746 it was uncertain whether an insurable interest was necessary to support a policy,2 although the fundamental principle requiring the presence of such an interest was perfectly well understood by the Continental authorities of an earlier time. In 1746, by Statute 19, Geo. II, c. 37, the making of policies without interest was prohibited, as was also the making of reinsurances, under the mistaken impression that they fell under condemnation as wager policies. During this period the doctrine of concealment was applied by the Court of King’s Bench in Seaman v. Fonereau,3 and the peculiar doctrine of warranties in insurance policies was foreshadowed, rather than definitely declared, in Jeffery v. Legender,4 and in Lethulier’s Case.5 Add to these a few somewhat uncertain cases on the effect of deviation,6 and we have practically the sum of the contributions Edition: current; Page: [116] made to insurance law by common law judges prior to Mansfield.

Lord Mansfield became Chief Justice of the Court of King’s Bench in 1756, which may rightly be considered as the date of the beginning of the development of the modern law of insurance as a part of the common law system. This great judge, thanks to his more liberal Scottish training, was not so slavishly attached to common law precedents as to be unable to perceive the necessity of recognizing merchants’ customs in determining rights under merchants’ contracts, nor so bigoted as to be unwilling to seek light from foreign sources. In insurance causes, as with causes involving other branches of the law merchant, he impanelled juries of merchants and underwriters, to establish customs and usages current among those who made insurances, and diligently consulted the time-honored maritime laws of the Continent, and the treatises of English and Continental writers.1 Thus he not only gave prompt justice to litigants who appeared before him, and provided a fit tribunal for merchants, but he saw so clearly the fundamentals of the theory of insurance, and understood so well its practical applications to the needs of business and commerce, that the numerous doctrines that he laid down have survived all of the many changes in commercial conditions and methods that have since taken place, and almost without exception they apply as well to the commercial transactions of to-day as to those of Mansfield’s own time. When he retired from the bench in 1788, he left a complete system of insurance law, as is so well shown by Sir James Park, a contemporary of Mansfield’s, in his brilliant work on marine insurance. This system has been much extended in modern times, but it has been little changed, and still stands as a lasting monument to the great judge whom Mr. Justice Buller2 rightly called “the founder of the commercial law of this country.”

53.: THE EARLY HISTORY OF THE ENGLISH PATENT SYSTEM1

IN 1827, when the subject of patent law reform first began to claim the attention of the English Legislature, an effort was made by the Lower House to obtain the data requisite for an investigation of the history of the patent system under the prerogative and at common law. In this year the Crown, in compliance with a resolution of the House, ordered a return to be prepared ‘of the titles and dates of all special privileges and patents granted in England previous to March 1, 1623, and stating whether for English or foreign manufactures and inventions.’ Unfortunately, the resources of the Keepers of the National Records proved unequal to the demands made upon them; and as a matter of fact the return was never presented. The resolution, nevertheless, deserves to be rescued from oblivion. For, while on the one hand it excludes as foreign to the inquiry an investigation of the commercial privileges of the trading companies, the supposed connexion of which with patents for inventions has misled so many writers upon Patent Law, it includes all grants made in respect of manufactures or inventions irrespective of the nature of the privileges conferred therein. In other words, we are told to look, not for Monopoly patents, but for grants Edition: current; Page: [118] to individuals made in furtherance of particular industries. With this clue to guide us we shall at once proceed to inquire, firstly, at what period the Crown by means of its grants first actively interfered in the promotion of industry, and secondly, what relation these grants may be found to bear to the first recorded Monopoly patents of invention. For this purpose we may briefly summarize the conclusions which may be obtained from a perusal of any standard history of industrial progress in this country.

During the period of history known as the Middle Ages, the industrial attainments of the English were far below the level of their continental rivals, France, Germany, Italy, Spain and the Low Countries. Moreover, throughout Europe progress in the manufacturing arts is found to be due, not so much to individual experimental effort, as to the slow infiltration of improved processes, the source of which is ultimately traceable to the more advanced civilization of the East. As late as the sixteenth century the type of English society was mainly that of an agricultural and mining community, exchanging its undressed cloth, wool, hides, tin and lead for the manufactures of the continent and the produce of the East. The rise of the native cloth industry in the fourteenth century gave to this country her first considerable manufacturing industry: and, inasmuch as the development of the industry is universally attributed to the fostering influence of the Crown, it will be necessary to scrutinize somewhat closely the various grants by means of which these results were obtained. For the facts here presented no originality is claimed. Their connexion, however, with the history of patent law has never yet been properly established.

In the letters of protection to John Kempe and his Company dated 1331 (Pat. 5 Ed. iii p. 1, m. 25),1 will be found the earliest authenticated instance of a Royal grant made with the avowed motive of instructing the English in a new industry. Here we have, not a solitary instance of protection, but the declaration of a distinct and comprehensive policy Edition: current; Page: [119] in favour of the textile industry; for the grant contains a general promise of like privileges to all foreign weavers, dyers and fullers, on condition of their settling in this country and teaching their arts to those willing to be instructed therein. Nor is this all. In 1337 these letters patent were expressly confirmed by a statute framed for the protection of the new industry, cap. 5 of which enacts, that all cloth-workers of strange lands, of whatsoever country they may be, which will come into England, Ireland, Wales, and Scotland, and within the King’s power, shall come safely and surely and shall be in the King’s protection and safe-conduct to dwell in the same lands, choosing where they will; and to the intent that the said clothworkers shall have the greater will to come and dwell here, Our Sovereign Lord the King will grant them franchises as many and such as may suffice them.1

As it is with the continuity rather than with the success of the new policy that we have here to deal, we shall briefly enumerate in their chronological order the grants which appear to have been issued in furtherance of the above object. In 1336 similar letters were issued (10 Ed. III, Dec. 12) to two Brabant weavers to settle at York in consideration of the value of industry to the Realm. In 1368 (42 Ed. III, p. 1) three clockmakers of Delft were invited to come over for a short period. In the following reign we are informed (Smiles, Huguenots, p. 10) that the manufacture of silk and linen was established in London by the king by the introduction of similar colonies from abroad, but whether by letters patent or otherwise has not been ascertained. The first instance of a grant made to the introducer of a newly-invented Edition: current; Page: [120] process will be found in letters patent dated 1440 (18 H. 6. Franc. 18. m. 27) to John of Shiedame, who with his Company was invited to introduce a method of manufacturing salt on a scale hitherto unattempted within the kingdom. Twelve years later, in 1452, a grant was made in favour of three miners and their Company, who were brought over from Bohemia by the king on the ground of their possessing ‘meliorem scientiam in Mineriis’ (Rymer, xi. 317).

These instances, although, probably, not exhaustive of the industrial grants of the fourteenth and fifteenth centuries, sufficiently illustrate the well-known citation from the Year Book, 40 Ed. III, fol. 17, 18, to the effect that the Crown has power to grant many privileges for the sake of the public good, although prima facie they appear to be clearly against common right.

With the alchemical patents of Henry VI, wrongly assigned by Hindmarch and subsequent writers to the reign of Edward III, we must deal briefly.

In 1435-36 two successive Commissions were appointed to inquire into the feasibility of making the philosopher’s stone for medicinal and other purposes. Respecting these Commissions we are assured by Prynne in his Aurum Reginæ that they proved ‘entirely abortive for aught that he could find.’ The fiction of a monopoly having been intended, based upon an obviously inaccurate account in Moore’s Reports, p. 671, may be dismissed as the invention of a later date. Other so-called alchemical patents resolve themselves into either warrants for the arrest of the individuals concerned, or dispensations from the penal statute of 5 Henry IV, by which the practice of transmutation was made a felony. In any case the connexion of these grants with the history of patent law must be considered as exceedingly remote.

With the accession of the Tudor dynasty the patent system underwent a characteristic change. In place of the open letters for the furtherance of the national industry, we now find the Crown negotiating for the purpose of attracting skilled foreigners into its own service. Amongst these we may instance the introduction of German armourers, Italian shipwrights and glass-makers, and French iron-founders and Edition: current; Page: [121] sail-makers. In the absence of any grants recorded in connexion with these transactions, it is impossible to define the precise relations existing between the Crown and the immigrant artisan. The Italian glass-makers introduced circa 1550, i. e. under the protectorate of Somerset, were recalled by the Venetian State; but the French iron-founders appear to have successfully established in the Weald of Sussex the art of casting iron ordnance, which shortly afterwards superseded the older forms of bronze cannon.

The first acts of Elizabeth were directed to the question of national defence. In 1560 the reformation of the coinage was taken in hand, for which purpose a body of Easterling assayers were brought over. In the following year the policy of the promotion of new industries under the special protection of the Crown was inaugurated and steadfastly pursued to the last few years of the reign. As to the legality of the new licenses no scruples appear to have been entertained. The monopolies were not without foreign precedents. Throughout Western Europe the new art of printing was being controlled and regulated by special licenses. With this preface we may leave the following list of grants to speak for itself. Their history from the political and economic standpoints has recently formed the subject of a monograph by Dr. Hyde Price (English Patents of Monopoly. Boston, 1906) to which frequent reference will be made. The list, it should be stated, has been prepared from the Calendars of the Patent Rolls of Elizabeth. Its claim to completeness for this reign, therefore, rests mainly upon the sufficiency of these Calendars.

54.: THE HISTORY OF THE CARRIER’S LIABILITY1

THE extraordinary liability of the common carrier of goods is an anomaly in our law. It is currently called “insurer’s liability,” but it has nothing in common with the voluntary obligation of the insurer, undertaken in consideration of a premium proportioned to the risk. Several attempts have been made to explain it upon historical grounds, the most elaborate that of Mr. Justice Holmes.3 His explanation is so learned, ingenious, and generally convincing, that it is proper to point out wherein it is believed to fall short.

His argument is in short this. In the early law goods bailed were absolutely at the risk of the bailee. This was held in Southcote’s Case,4 and prevailed long after. The ordinary action to recover against a bailee was detinue. But as that gradually fell out of use in the seventeenth century its place was necessarily taken by case; and in order that case might lie for a nonfeasance, some duty must be shown. There were two ways of alleging a duty: by a super se assumpsit, and by stating that the defendant was engaged in a common occupation. It was usual to include an allegation of negligence, from abundant caution, but that was Edition: current; Page: [149] “mere form.” Chief Justice Holt1 finally overthrew the doctrine of the bailee’s absolute liability, except where there was a common occupation, or (of course) where there was an express assumpsit. The extraordinary liability of a carrier is therefore a survival of a doctrine once common to all bailments.

Judge Holmes does not explain satisfactorily why this doctrine should not have survived in the case even of all common occupations, but only in the case of the common carrier of goods; nor does he account for the fact that the carrier is held absolutely liable, not merely, like the bailee once, for the loss of goods, but, unlike that bailee, for injury to them. The difficulties were not neglected from inadvertence, for he mentions them.2 But without laboring these points, his main proposition should be carefully considered. Is it true that the bailee was once absolutely liable for goods taken from him? It may be so; Pollock and Maitland seem to give a hesitating recognition to the doctrine,3 but the evidence is not quite convincing.4

No one versed in English legal history will deny that the bailee of goods was the representative of them, and the bailor’s only right was in the proper case to require a return; and therefore that when a return was required it was incumbent upon the bailee to account. Nor can it be doubted that the law then tended to lay stress on facts rather than reasons,—to hang the man who had killed another rather than hear his excuse. We should therefore not be surprised, on the one hand, to find that, where one had obliged himself to return a chattel, no excuse would be allowed for a failure to return. On the other hand, by the machinery of warranty, it was always possible to explain away the possession of an undesirable chattel; why not to explain the non-possession of a desired one? We should therefore not be greatly surprised if the authorities allowed some explanation.

Three actions were allowed a bailor against a bailee: detinue, account, and (after the Statute of Westminster) case. Let us see whether in either of these actions the defendant was held without the possibility of excuse.

Case lies only for a tort; either an active misfeasance, or, in later times, a negligent omission. There must therefore be at the least negligence; and so are the authorities. The earliest recorded action against a carrier is case against a boatman for overloading his boat so that plaintiff’s mare was lost; it was objected that the action would not lie, because no tort was supposed; the court answered that the overloading was a tort.1 So in an action on the case for negligently suffering plaintiff’s lambs, bailed to defendant, to perish, it was argued that the negligence gave occasion for an action of tort.2 So later, in the case of an agister of cattle, the negligence was held to support an action on the Edition: current; Page: [151] case.1 In these cases the action would not lie except for the negligence.2 In the case of ordinary bailments, therefore, negligence of the bailee must be alleged and proved to support an action on the case against him. I shall hereafter consider actions on the case against those pursuing a common occupation.

In the action of account there is hardly a doubt that robbery without fault of bailee could be pleaded in discharge before the auditors.3 To the contrary is only a single dictum of Danby, C. J., and there the form of action is perhaps doubtful.4 Indeed, in Southcote’s Case the court admitted that the factor would be discharged before the auditors in such a case, and drew a distinction between factor and innkeeper or carrier.

In the action of detinue then, if anywhere, we shall find the bailee held strictly; and the authorities must be examined carefully.

The earliest authority is a roll where, in detinue for charters, the bailee tendered the charters minus the seals, which had been cut off and carried away by robbers. On demurrer this was held a good defence.5 The next case was detinue for a locked chest with chattels. The defence was that the chattels were delivered to defendant locked in the chest, and that thieves carried away the chest and chattels along with the defendant’s goods. The plaintiff was driven to take issue on the allegation that the goods were carried away by thieves.6 A few years later, counsel said without dispute Edition: current; Page: [152] that if goods bailed were burned with the house they were in, it would be an answer in detinue.1 Then where goods were pledged and put with the defendant’s own goods, and all were stolen, that was held a defence; the plaintiff was obliged to avoid the bar by alleging a tender before the theft.2 Finally in 1432, the court (Cotesmore, J.) said: “If I give goods to a man to keep to my use, if the goods by his misguard are stolen, he shall be charged to me for said goods; but if he be robbed of said goods it is excusable by the law.”3

At last, in the second half of the fifteenth century, we get the first reported dissent from this doctrine. In several cases it was said, usually obiter, that if goods are carried away (or stolen) from a bailee he shall have an action, because he is charged over to the bailor.4

In several later cases the old rule was again applied, and the bailee discharged.5 There seems to be no actual decision holding an ordinary bailee responsible for goods robbed until Southcote’s Case.6

This was detinue for certain goods delivered to the defendant “to keep safe.” Plea, admitting the bailment alleged, that J. S. stole them out of his possession. Replication, that J. S. was defendant’s servant retained in his service. Demurrer, and judgment for the plaintiff.

The case was decided by Gawdy and Clench, in the absence of Popham and Fenner; and it is curious that Gawdy and Clench had differed from the two others as to the degree of liability of a bailee in previous cases.1 It would seem that judgment might have been given for plaintiff on the replication; the court, however, preferred to give it on the plea. This really rested on the form of the declaration; a promise to keep safely, which, as the court said, is broken if the goods come to harm. The only authority cited for the decision was the Marshal’s Case, which I shall presently examine and show to rest on a different ground. The rest of Coke’s report of the case (of which nothing is said in the other reports) is an artificial and, pace Judge Holmes, quite unsuccessful attempt to reconcile, in accordance with the decision, the differing earlier opinions. The case has probably been given more authority than it really should have. At the end of the manuscript report cited we have these words: “Wherefore they (cæteris absentibus) give judgment for the plaintiff nisi aliquod dicatur in contrario die veneris proximo.” And it would seem that judgment was finally given by the whole court for the defendant. In the third edition of Lord Raymond’s Reports is this note: “That notion in Southcote’s Case, that a general bailment and a bailment to be safely kept is all one, was denied to be law by the whole court, ex relatione Magistri Bunbury.”2 It was not uncommon for a case to be left half reported by the omission of a residuum; and it may be that Southcote’s Case as printed is a false report. One would be glad to see the record.

Southcote’s Case is said to have been followed for a hundred years. The statement does it too much honor. It seems to be the last reported action of detinue where the excuse of loss by theft was set up; and, as has been seen, the principle Edition: current; Page: [154] it tries to establish does not apply to other forms of action. It was cited in several reported actions on the case against carriers, but seems never to have been the basis of decision; on the other hand, in Williams v. Lloyd,1 where it was cited by counsel, a general bailee who had lost the goods by robbery was discharged. The action was upon the case.

Having thus briefly explained why Judge Holmes’s theory of the carrier’s liability is not entirely satisfactory, I may now suggest certain modifications of it. I believe, with him, that the modern liability is an ignorant extension of a much narrower earlier liability;2 but the extension was not completed, I think, for eighty years after the date he fixes, and the mistaken judge was not Lord Holt, but Lord Mansfield.

From the earliest times certain tradesmen and artificers were treated in an exceptional way, on the ground that they were engaged in a “common” or public occupation; and for a similar reason public officials were subjected to the same exceptional treatment. Such persons were innkeepers,3 victuallers, taverners, smiths,4 farriers,5 tailors,6 carriers,7 ferrymen, sheriffs,8 and gaolers.9 Each of these persons, having undertaken the common employment, was not only at the service of the public, but was bound so to carry on his employment as to avoid losses by unskilfulness or improper preparation for the business. In the language of Fitzherbert, “If a smith prick my horse with a nail, I shall have my action on the case against him without any warranty by the smith to do it well; for it is the duty of every artificer to exercise his art rightly and truly as he ought.”10 By undertaking the special duty he warrants his special preparation for it. The action is almost invariably on the case.

One of the earliest cases in the books was against an innkeeper, Edition: current; Page: [155] stating the custom of England for landlords and their servants to guard goods within the inn; it was alleged that while plaintiff was lodged in the inn his goods were stolen from it. There was no allegation of fault in the defendant, and on this ground he demurred; but he was held liable notwithstanding. The plaintiff prayed for a capias ad satisfaciendum. Knivet, J. replied, that this would not be right, since there was no tort supposed, and he was charged by the law, and not because of his fault; it was like the case of suit against the hundred by one robbed within it; he ought not to be imprisoned. The plaintiff was forced to be content with an elegit on his lands.1 A few years later a smith was sued for “nailing” the plaintiff’s horse; the defendant objected that it was not alleged vi et armis or malitiose, but the objection was overruled, and it was held that the mere fact of nailing the horse showed a cause of action.2 An action was brought against a sheriff for non-return of a writ into court; he answered that he gave the writ to his coroner, who was robbed by one named in the exigent. He was held liable notwithstanding, Knivet, J. saying, “What you allege was your own default, since the duty to guard was yours.”3

In 1410, in an action against an innkeeper, Hankford, J. used similar language: “If he suffers one to lodge with him he answers for his goods; and he is bound to have deputies and servants under him, for well keeping the inn during his absence.”4 A noteworthy remark was Judge Paston’s a few years later: “You do not allege that he is a common marshal to cure such a horse; and if not, though he killed your horse by his medicines, still you shall not have an action against him without a promise.”5 Soon after was decided the great case of the Marshal of the King’s Bench.6 This was debt on a statute against the Marshal for an escape. The prisoner Edition: current; Page: [156] had been liberated by a mob; the defendant was held liable. The reason was somewhat differently stated by two of the judges. Danby, J. said that the defendant was liable because he had his remedy over. Prisot, C. J. put the recovery on the ground of negligent guard. This case was frequently cited in actions against carriers; but not, I think, in actions against ordinary bailees before Southcote’s Case.

The earliest statement of the liability of a common carrier occurs, I think, in the Doctor and Student (1518), where it is said that, “if a common carrier go by the ways that be dangerous for robbing, or drive by night, or in other inconvenient time, and be robbed; or if he overcharge a horse whereby he falleth into the water, or otherwise, so that the stuff is hurt or impaired; that he shall stand charged for his misdeameanor.”1 In the time of Elizabeth, the hire paid to the carrier was alleged as the reason for his extraordinary liability.2 Finally, in Morse v. Slue3 the court “agreed the master shall not answer for inevitable damage, nor the owners neither without special undertaking: when it’s vis cui Edition: current; Page: [157] resisti non potest; but for robbery the usual number to guide the ship must be increased as the charge increaseth.”

Thus stood the law of carriers and of others in a common employment down to the decision in Coggs v. Bernard.1 Two or three things should be noted. First, carriers are on the same footing with many other persons in a common employment, some bailees and some not, but all subjected to a similar liability, depending upon their common employment; and there is no evidence in the case of these persons of anything approaching a warranty against all kinds of loss. The duty of the undertaker was to guard against some special kind of loss only. Thus the gaoler warranted against a breaking of the gaol, but not against fire; the smith warranted against pricking the horse; the innkeeper against theft, but not against other sorts of injury;2 the carrier against theft on the road, but probably not against theft at an inn.

Secondly. This is put on different grounds; but all may be reduced to two. On the one hand, it may be conceived that the defendant has undertaken to perform a certain act which he is therefore held to do: either because the law forces him into the undertaking (as a hundred is forced to answer a robbery), or, as seems to have been in Judge Paston’s mind, because there was some consent which took the place of a covenant. On the other hand, it may be conceived that the defendant has so invited the public to trust him that certain avoidable mischances should be charged to his negligence; he ought to have guarded against them. “The duty to guard” is the sheriff’s or the carrier’s or the innkeeper’s; he is bound to have deputies for well keeping the inn; if a mob breaks in he shall be charged for his negligent guard; the usual number must be increased as the charge increases; if he go by the ways that be dangerous, or at an inconvenient time, he shall stand charged for his misdemeanor. It is to be remembered that during this time case on a super se assumpsit had this same doubtful aspect; to use a modern phrase, it was even harder then than now to tell whether such an action sounded in contract or in tort. The test of payment for Edition: current; Page: [158] services is a loose and soon abandoned method of ascertaining whether the defendant was a private undertaker or in a common employment.1

Another thing important to notice is that all precedents of declarations against a carrier or an innkeeper allege negligence.2 It is of course impossible to prove that this did not become a mere form before rather than after Lord Holt’s time; but it is on the whole probable that it originally had a necessary place.

We have now brought the development of the law to the great case of Coggs v. Bernard.3 This was an action against a gratuitous carrier, and everything said by the court about common carriers was therefore obiter. Three of the judges did, however, treat the matter somewhat elaborately. Gould, J. put the liability squarely on the ground of negligence: “The reason of the action is, the particular trust reposed in the defendant, to which he has concurred by his assumption, and in the executing which he has miscarried by his neglect. . . . When a man undertakes specially to do such a thing, it is not hard to charge him for his neglect, because he had the goods committed to his custody upon those terms.” Powys, J. “agreed upon the neglect.” Powell, J. emphasized the other view, that “the gist of these actions is the undertaking. . . . The bailee in this case shall answer accidents, as if the goods are stolen; but not such accidents and casualties as happen by the act of God, as fire, tempest, &c. So it is in 1 Jones, 179; Palm. 548. For the bailee is not bound upon any undertaking against the act of God.” Holt, C. J. seized the occasion to give a long disquisition upon the law of bailments. In the course of it he said that common carriers are bound “to carry goods against all events but acts of God and of the enemies of the King. For though the force be never so great, as if an irresistible multitude of people should rob him, nevertheless he is chargeable.” And the reason is, that otherwise they “might have an opportunity Edition: current; Page: [159] of undoing all persons that had any dealings with them, by combining with thieves,” &c.

Was this the starting point of the modern law of carriers? It seems to be a departure from the previous law as I have stated it, but how far departing depends upon what was meant by act of God. Powell appears to include accidental fire, and cites a case where the death by disease of a horse bailed was held an excuse. Lord Holt does not explain the term; but his reasoning is directed entirely to loss by robbery. That “act of God” did not mean the same thing to him and to us is made probable by the language of Sir William Jones,1 whose work on Bailments follows Lord Holt’s suggestions closely. After stating Lord Holt’s rule as to common carriers, he adds that the carrier “is regularly answerable for neglect, but not, regularly, for damage occasioned by the attacks of ruffians, any more than for hostile violence or unavoidable misfortune,” but that policy makes it “necessary to except from this rule the case of robbery.” As to act of God, “it might be more proper, as well as more decent, to substitute in its place inevitable accident,” since that would be a more “popular and perspicuous” term. He cites the case of Dale v. Hall,2 which appeared to have held the carrier liable though not negligent; but explains that the true reason was not mentioned by the reporter, for there was negligence. Much the same statement of the law of carriers is made by Buller in his Nisi Prius.3 It would seem, then, that the change in the law which we should ascribe to Lord Holt was one rather in the form of statement than in substance; but the new form naturally led, in the fulness of time, to change in substance.

In the fulness of time came Lord Mansfield, and the change in substance was made. In Forward v. Pittard,4 we have squarely presented for the first time a loss of goods by the carrier by pure accident absolutely without negligence,—by an accidental fire for which the carrier was not in any way responsible. Counsel for the plaintiff relied on the language Edition: current; Page: [160] of Lord Holt. Borough, for the defendant, presented a masterly argument, in which the precedents were examined; the gist of his contention was, that a carrier should be held only for his own default. Lord Mansfield, unmoved by this flood of learning, held the carrier liable; and he uttered these portentous words: “A carrier is in the nature of an insurer.”

From that time a carrier has been an insurer without the rights of an insurer.

55.: EARLY FORMS OF CORPORATENESS1

THE Italians conceived the corporation to be a fictitious person. Now this was a refined and artificial doctrine, and therefore a late one. Before it spread over England, conducted through the channels of Canonism, natural corporateness had already appeared in certain forms. With regard to this natural growth, there are many questions which, if we cannot answer, we ought at least to ask. What was the earliest form of corporateness here? Was it popular with Englishmen? Upon what principle and by whose authority was corporateness granted to some groups of persons and withheld from others? How far did the early form differ from the final, and by what influence was that difference gradually removed?

The early forms of corporateness are two-fold—the ecclesiastical and the lay. Of these the ecclesiastical body was the more abstract, foreign, and fictitious: the lay body was the more concrete, natural, and spontaneous. The spiritual bodies were dependent upon Canonist Law and upon the authorised version as ordained by the Pope. Their want of a natural membership and a natural existence, and their inability to sin and be damned, left them a mere name. On the other hand, the temporal bodies—and especially the Edition: current; Page: [162] early forms of municipal association—were vigorous, independent, and full of a corporate spirit; they soon showed themselves fit for that autonomy which is claimed to be native in Englishmen.

In a previous chapter on the corporation sole some slight mention has been made of the beginnings of corporateness in the Church. It is now proposed to consider the beginnings of municipal corporateness.1

When did the borough become a corporation?

Presumably we should reply: “When the lawyers conferred upon it an abstract juristic personality.” That would be to answer one question by suggesting another.

If a royal charter necessarily implied incorporation, then there were municipal corporations in the time of William the Conqueror. Among the privileges “incident” to the perfect corporation are the right to use a common seal, to make by-laws, to plead in Courts of law, and the right to hold property in succession. If the existence of these privileges necessarily implied corporateness, then there were many municipal corporations within a few centuries of the Conquest. But these privileges were apparently held alike by boroughs which had, and boroughs which had not, a royal charter.

The question is one to which Merewether and Stephens paid special attention. Their laborious History of Boroughs, published in 1835, was designed to throw light on what was then the engrossing subject of municipal reform. The sixth of the eleven inferences which they claim to have established declared that the burghal body got its first charter of municipal incorporation in the reign of Henry VI.2 Their research fixes the first date at which certain magic words are found in use as a formula of incorporation. Being thus concerned with documentary evidence, they nowhere admit that the essence of municipal corporateness is to be found far earlier. Both their facts and their inferences have been vigorously attacked, charters being cited which suggest Edition: current; Page: [163] formal incorporation and a kind of abstract personality conferred on towns a hundred years before. Dr. Gross observes that municipal corporateness existed as early as the reign of Edward I.1

Such differences of opinion illustrate the difficulty of searching for the germ of true corporateness in early institutions. Much caution is needed on a road where milestones are irregular and landmarks few. Stages in the development of gild and borough can be definitely dated (if at all) only when all extant charters have been disclosed, analysed, and classified. The various forms of apparent corporateness are neither clearly marked off from one another, nor capable of classification according to modern standards. Such differences as existed in fact between these various forms are ignored and confused by the vocabulary. If twenty men hold land (a) jointly, (b) severally, or (c) as a true corporation, these are three distinct conceptions: but all three are covered in early times by the one word communitas.2 Inferences based upon names are therefore dangerous. But the ambiguity of words does not rest there. Even in modern English the word corporation is used with such a loose and extended meaning that it is necessary to define the sense in which the word will be used in this chapter. Some writers have applied the word to any association which combines communal ownership and interests with the slightest degree of autonomy and representation.3 Thus Sir Henry Maine says, “The family is a corporation.”4 Another writer observes that “as cities and built towns have a more compact municipal life and Edition: current; Page: [164] action than other places, the notion of corporations (in the political sense) is apt to be exclusively attached to them. But this is quite incorrect. Every place where a court leet has been held is, or has been, really a corporation. Hundreds are corporations. . . . counties are also corporations. So also are parishes and the true ‘Wards’ of London.”1 It is proposed to use the word corporation now in the strict sense of a body possessing an ideal personality which is distinguished from the collective personalities of the members which compose the body. In this sense of the word, the family, the county, and the hundred never became corporations.

While examining the early forms of the borough, one becomes aware of other groups of men which might have attained, but which failed to attain, incorporation.

In the village, for instance, there existed, even before Domesday, a kind of communal ownership. Whether the land was first owned by the community, or—which seems more probable—first owned by the individual, we cannot pause to consider.2 What was the exact nature of that communal ownership we cannot hope to decide. All villages were not alike, and if they were alike they would probably resist any attempt to thrust them into the classes approved by modern ideas.

Corporateness is on no account to be presumed from communal ownership. True corporateness entails a polish and refinement not to be looked for in the early stages of village life. In the words of Professor Maitland, “if we introduce the persona ficta too soon we shall be doing worse than if we armed Hengest and Horsa with machine-guns or pictured the Venerable Bede correcting proofs for the press.”3

Yet although corporateness is not to be presumed where community is found, the existence of communal ownership Edition: current; Page: [165] offers some prospect that corporateness may appear later. But that is just what does not happen in the village. The village is never incorporated. At first it is too small, too unimportant, too ill-organised. Its geographical limits, its agricultural system, and the natural feeling of neighbourliness tend to make a unit of its inhabitants; but the group of persons never becomes a true group-person. At a later date the village fails to attain corporateness for another reason. In England, as in Germany, the “kings became powerful and the hereditary nobles disappeared. There was taxation. The country was plotted out according to some rude scheme to provide the king with meat and cheese and ale. Then came bishops and priests with the suggestion that he should devote his revenues to the service of God, and with forms of conveyance which made him speak as if the whole land were his to give away.”1 And so, when the king has learnt that the land is his land, and is a source of possible profit to him, the villages throughout the country begin to fall under the dominion of lords. Henceforward the village develops not so much of itself as under the lord—and perhaps in spite of him. He interposes himself between it and all those external forces which might otherwise have hammered it into corporate shape.

A similar result occurred in the case of the manor. The manor was an economic, administrative, and judicial unit, but, as such, it failed in general to become a group-person, because there was one person (the lord) who could always represent the group of persons contained in the manor. What the manor was is not precisely known. It was certainly a financial unit in the assessment of Domesday and long afterwards. Taxes were more conveniently and speedily collected in large round sums from rich landlords than in small sums from scattered and possibly insolvent tenants. Consequently the landlord was made to stand between the king and the group of manorial taxpayers who might otherwise have been ultimately formed into a corporate organisation. There was never in the village or in the manor that Edition: current; Page: [166] keen sense of common property, of profitable common assets, of common revenues and privileges, which so largely assisted the borough to realise corporateness.

The county also and the hundred failed to become generally incorporated. They lacked the importance, the spontaneity, and the unity of the borough: they had no such opportunities or desire for organising a natural self-government: they had no such privileges to strive for and to maintain.

Both county and hundred were governmental districts:1 each had a court, and apparently each had had communal property.2 Some counties even possessed such charters as were given to early boroughs. Devon and Cornwall received from King John grants of liberties which were in form not unlike the grants made to towns.3 They were treated as a communitas, a collective body of men whom to name individually would be impossible as well as wearisome. A grant of liberties had been made by John in similar form to all the free men of England and their heirs. But the Magna Carta no more made England a corporation than the charters to Devon and Cornwall incorporated the men of those counties. The western shire may by its position and history have possessed and preserved an unusual degree of exclusive unity. There seems to have been a common seal belonging to the county of Devon.4 The county also was capable of being indicted, although it was doubtful how damages could be recovered from it.5 “Among the several qualities which belong to corporations,” says Lord Kenyon, C. J., in 1788, “one is, that they may sue and be sued: that puts them, then, in contradistinction to other persons. I do not say that the inhabitants of a county or a hundred may not be incorporated to some purposes, as if the king were to grant Edition: current; Page: [167] lands to them, rendering rent, like the grant to the good men of Islington town. But where an action is brought against a corporation for damages, those damages are not to be recovered against the corporators in their individual capacity, but out of their corporate estate: but if the county is to be considered as a corporation, there is no corporate fund out of which satisfaction is to be made.”1 The county therefore, though an organised collective body with group liability, failed to obtain a corporate existence apart from that of the several inhabitants.

That appearance of corporateness which grew up in the English boroughs was a native English product. However Italian may have been the principles which came to govern the corporation at the end of the Middle Ages, it is doubtful whether there was anything Roman about the earliest English municipalities, except perhaps, here and there, the fortifications. The connection with Rome which was afterwards so well maintained in the ecclesiastical houses, had been broken in the towns. The thread of Roman influence in England had been snapped when the Romans retired and left the country to relapse into barbarism.

From that barbarism and lawlessness there emerged at length the true germ of municipal life. It was the burh, the strong place upon a hill, the rallying-point and shelter for the country-side. At first it was neither large, nor populous, nor well-built. It was just such a stockade as any man might make wherewith to enclose and protect his house. But it protected a group; and it was the interest and duty of the group to establish and maintain the defences. Not only must each man help to build and repair the walls, but he must also help to maintain some kind of rough discipline within them. There must be no burh-bryce,2 no breach of the burh or borough.3 The burh is sacrosanct.1 Edition: current; Page: [168] Moreover, the greater the burh, the more sacred the peace therein.2

Then, because there was peace in the borough, men carried on their buying and selling therein. There were witnesses: there were all the materials for doing right between honest men and thieves, and generally for hearing the case of any who had a grievance. If it was well to have witnesses for the sale of cattle and goods, it was not well to have sales of cattle and goods where there were no witnesses. Consequently men sought the site of the burh because it was a military and a marketing centre, a meeting-place, and a place for obtaining justice.3

The military needs of the country-side in time became less pressing, but otherwise the burh or borough grew in importance. After the Norman Conquest the town was not protected by a common fort, but was dominated by a castle.4 The institution of these castles was typical of Norman rule. The king assumed a new position as the overlord of each of his subjects: henceforward a universal “king’s peace” was to be substituted for the various local “peaces.”

But in spite of the pressure of Norman rule the rise of the boroughs was not for long impeded. Open rebellion had been powerless to regain England for the English, but in the towns the innate Saxon spirit of self-government asserted itself. Commerce grew: population increased: the position of the old burghal shire-towns was strengthened. Their importance began, however, to be challenged by upstarts, enfranchised manors, and other vills which enjoyed religious or commercial advantages. Still it was possible to distinguish the old borough from its newer rivals by a test which was not theoretic, but practical. It was not a difference arising out of the presence or absence of royal gifts of franchise: it was a difference arising out of facts within men’s knowledge. Edition: current; Page: [169] Local representation was required when the judges were sent round the country on circuit. The vill sent a reeve and four men to attend the justices in eyre: the borough sent twelve men. There was an unmistakable distinction of fact.1 A town either did, or did not, send twelve men. The distinction was perpetuated in two ways. In the first place it was important for the governors of the county. By the rough and ready methods of direct taxation in the twelfth century, “cities and boroughs”2 were charged with the payment of certain gifts and “aids.” The Exchequer was not likely to allow uncertainty to exist with regard to the towns which owed the tax. Secondly, the distinction was an important one for the governed, when the parliamentary system was created in the time of Edward I. For the first great representative council3 writs were directed to the sheriffs of certain counties and to certain boroughs and cities, commanding the recipient to choose knights, burgesses, and citizens to attend.4 The borough contributed its two burgesses if it had previously sent its twelve men to attend the justices in eyre. There was thus less doubt whether a town was or was not a borough.

The communalism of the early village was not reproduced in the early borough. This was not because there was lacking among burgesses the identity of agricultural interest which existed amongst villagers. On the contrary there was a strong pastoral element in the early borough. But the burgesses, when once they ceased to form units in the scheme of national and local defence were not knit together by reason of land tenure. Trade and the borough organisation upset the old agrarian scheme. The borough had to fight its own battle against trade rivals at a time when commercial success was a matter of trade monopoly. It had to struggle for itself Edition: current; Page: [170] to obtain its monopoly, to win its charter, to gain its right to manage itself and farm its own tolls. It was these common aspirations and interests which bound the burgesses together. They were not united as were the villagers, by reason of their being tenants of one lord.

The burgesses indeed were not tenants of one lord. Their tenure was heterogeneous.1 Homogeneity vanished before the new influences of burghal life.2 And because there was less homogeneity in burghal tenure, the lord had the less power in the borough. The burgesses dealt with the king direct: they excluded the mesne lords. The king exacted his tolls and taxes from the townsmen, and they tried to win from him the recognition of their rights of meeting and market. They strove to eliminate the middleman. They offered a fixed round sum as the farm of their borough, and desired to assess for themselves in their own manner the relative liabilities of burgesses to make up that sum. Thus the payment of the firma burgi by the community was the beginning of municipal self-government, and a step—though not the final step—in the direction of corporateness.

Some important results follow. Burgesses did not hold land as an individual held it. They broke loose from the feudal system. They evaded, when they could, the discharge of feudal dues. The lord of the land lost his near interest in it: he lost his escheat: he became remote: he sank back into the position of “the man with a rent-charge.”3 The men of the borough contended stoutly for the authority of the burghal courts, and for the validity of alleged burghal customs. One such custom concerning burgage tenure4 as upheld in the borough court permitted men to bequeath their houses by will, as “quasi-chattels.”5

The borough had considerable advantages to lose. These advantages were intimately concerned with the prosperity of the community, and so were highly prized. They were for the most part of spontaneous growth, not acquired by formal grant. The king had not yet formulated in full his royal right to confer upon, and withhold from, groups of townsmen various privileges which might be made a source of profit to the royal purse. Hitherto these privileges had been claimed by the burghers without offence and exercised without restriction.1 But the day came when the kingly prerogative was asserted in order to uphold the kingly dignity and fill the kingly pocket. It was to the interest of the Crown that liberty enjoyed by the subject should be considered a diminution of the power enjoyed by the king; consequently it was a gracious concession on the part of the king, which the subject should acknowledge with gratitude and even payment. However strong the natural growth of these burghal privileges, the borough was not safe in its possession of them until they were recognised and confirmed by the authority of the Crown. Natural prescriptive right had to be supplemented or supplanted by royal authorisation.2 The burgesses wished Edition: current; Page: [172] to be secure in their title to the franchises which they claimed. There were kings like Richard I who were perfectly willing, for a consideration, to meet the wishes of the burgesses.1

Every instance of a charter granted to a town was an opportunity for the Crown to define, to amplify, or to complicate that formula in which earlier royal concessions to towns had been made. Every time the king or the royal advisers framed a charter, he or they had to consider what he was conceding and to whom. Was he making a grant merely to the citizens of a town, or to them and their heirs, or to them and their successors? Who was to have the benefit of the grant when the citizens died? Would the citizens as a body ever die?

It was probably a long while before the communitas of townsmen was regarded as anything more than a mere aggregate of individuals. But the more the townsmen acted and were treated as a unit, the more natural it would seem to treat them as a collective person. To regard the group as a single person would be impossible until the group will was regarded as a single will.

Sometimes men are unanimous. In that case plurality naturally becomes unity: the many think and act “like one man.” But more often there is dissension: then unity becomes impossible—or possible only by some kind of fiction. Suppose a score of men cry “No,” while 80 cry “Aye”: to our modern minds it is plain that the “Ayes” have it. But the whole hundred men cannot thereby be said to cry “Aye,” unless men are content to ignore the voice of the minority and agree to record a fictitious unanimity. This recognition of the majority as equivalent to the whole, although so readily allowed to-day,2 is not an early principle. To count polls, to “give one man one vote,” to make a man count for one and Edition: current; Page: [173] no more, must have seemed in the Middle Ages unnatural and inconvenient. The opinion of the sage was thereby made of no greater weight than the opinion of the fool.

Italy and the Church helped to establish the authority of the major pars.1 It was conceded that the will of the universitas could be expressed by the major pars of members properly present at a proper meeting, if the major pars were also the sanior pars. Henceforward the shout of the major et sanior pars was allowed to drown the shout of the minority. When a minority began at length to be considered as bound by the vote of the majority, the communitas of the whole body began to show a truer corporateness.2

Two other influences were at work to unify and personify the group, the common seal,3 and the common name. The use of a seal provided a tangible token of burghal unity and unanimity. The seal was an authoritative sign which many men who could not read could recognise. The formal affixing of the common seal sanctified the expression of the common will and accentuated the singleness of the collective person. This accentuation was deepened by the existence of a common name.4 The possession of a common seal and a common name tended to mark off the borough community from other bodies which consisted merely of co-owners or joint tenants. The names of nascent corporations remained, however, suggestive of collective rather than single personality. The borough of X and the university of Y are legally described as the Mayor, Aldermen, and Burgesses of X, and the Chancellor, Masters, and Scholars of Y.5 The collective character of such corporate names show how hardly the personality of the group was to be distinguished from the sum Edition: current; Page: [174] of the members thereof. Nevertheless the facts were being prepared for the theory.

There is nothing surprising in the idea that a group of men is capable of collective action. Instances of early group-action might be multiplied almost indefinitely. There was, for example, group-accusation in the process of frank-pledge: in the village there was group-liability, in the manor group-payment. When the group-action becomes organised, the group is readily conceived to act as a person.1 One remarkable case of village personality is to be found in the Select Pleas in the Manorial Courts:2

“Ad istam curiam venit tota communitas villanorum de Bristwalton, et de sua mera et spontanea voluntate sursum reddidit domino totum jus et clamium quod idem villani habere clamabant.”

The village of Brightwaltham appears in Court as an organised community, a definite party to an action. By virtue of a quasi-juridical personality it enters into a formal agreement with the lord of the manor. It resigns its claim to the wood of Hemele, and in return gets rid of the lord’s claim to the wood of Trendale. If the feebly organised village had something of juristic personality, the strongly organised borough was likely to possess more. It is therefore the less surprising to find London town spoken of in a Yearbook of Edward III as a “Cominaltie come un singuler person qe puit aver action per nosme de comon come un sole person averoit.”3

If the borough could be thought of as a person, the time was now at hand when it could be considered a perpetual person.4 Mortmain legislation had hitherto been confined to ecclesiastical associations, but towards the end of the fourteenth century a change took place. It was realised that it was inconsistent and inconvenient that citizen groups should be exempted from the laws which were applied to religious Edition: current; Page: [175] groups. Accordingly the Second Statute of Mortmain struck at municipal bodies, because “mayors, bailiffs, and commons of cities, boroughs, and others which have offices perpetual” were “as perpetual as men of religion.”1 Thus this statute was not the least powerful of those forces which were co-ordinating the citizen body with the religious house, and preparing in England the way for the more refined Italian doctrines of corporateness.

To call a borough a perpetual person was to emphasise the distinction between it and its mortal members. To bring the borough into line with the religious houses was to subject it to the exact and polished notions of the Canonists. Side by side the members of the borough and of the religious house had to seek the royal licence to evade the mortmain restrictions.2

The charters which the boroughs were now anxious to obtain might be expected to show traces of the canonistic ideas. They might be expected to answer for us the question at what point the borough became a true corporation. But for two reasons the question is not to be answered so easily. In the first place the words and the thoughts underlying the words are vague and defy interpretation. The corporateness of a borough possessing a charter dated from this period is not proved merely by the presence therein of words which in later times implied corporateness.3 Incorporation was a Edition: current; Page: [176] thing which the burgesses of this period neither wanted nor realised that they lacked. “Nobody, no body wanted it,” says Professor Maitland.1 They wanted to be assured of their privileges to trade, hold land, and the like, but they probably had no desire for, and small knowledge of, corporateness in the abstract. There was in the boroughs a strong indigenous stock of what one may perhaps call “concrete corporateness,” upon which the alien growth of abstract corporateness was afterwards quietly and successfully grafted. In the second place the charters of this period are not decisive as to the corporateness of the boroughs, because at this point the confusion between borough and gild can no longer be ignored.

Although closely connected and frequently identified, gild and borough were distinct. Of the many forms of gild the gild merchant now concerns us most. It is sufficiently important to require some preliminary remarks.

Trade in the Roman world was largely in the hands of collegia,2 but it seems probable that the English gild merchant was not the survival of any Roman institution.3 Whether it was of exclusively English origin,4 or whether it came from the Continent,5 it appears in England soon after the Conquest, if not earlier, as a widely-spread trade organisation. In those days the towns were the trading units. Edition: current; Page: [177] Commerce was municipal and intermunicipal.1 The gild merchant, along with the several craft-gilds, supervised the conditions of trade and labour. Thus were regulated processes and prices, materials and tools, working-hours and wages, the number of apprentices and the nature of their duties. Thus also were punished dishonest workmanship, the use of bad stuff, or the use of short weights and measures. Consequently the traders of the town were united in the protection and pursuance of their common trade interests. Just as men met as Christians for mutual comfort and spiritual benefit, so they met as members of a gild for mutual protection and earthly benefit. The gild excluded the alien: it fostered a strong but narrow municipal monopoly. It was consequently a valuable asset of the town, and one for which it was most important to obtain royal recognition. It was largely identified with the town, its members with the townsmen, its system of government with the municipal system of government. This considerable identity has interest for those who are inquiring at what moment the borough became a corporation. For out of this identity arose the theory that the grant of gilda mercatoria to a borough was a grant of corporateness.2 According to this view the gild merchant was the corporate realisation of the borough: the gild machinery was transferred to the borough: the gild-head became the town-head: the gild-alderman became the town-alderman, the gild-hall the town-hall.3 The supporters of this view point out that the important members of the gild Edition: current; Page: [178] were the same men as the important members of the borough:1 that the gild organisation supplanted the old borough moot,2 and therefore it was by way of the gild that the borough received from the Crown the privilege of incorporation.3

This theory, after having won wide acceptance,4 has been strenuously opposed by Mr. Gross.5 It must be admitted that in a few cases gild and borough may have become fused, and that in general the spirit and organisation of the gild-community may have affected the development of the borough-community. But if we find that both gild and borough are described by the word “communitas,” we must remember that that word was capable of both a refined and a natural meaning. It may well be that the gild-community was as concrete as the truly corporate borough-community is abstract.

No general inference can be drawn with safety from the history of any single town,—least of all from that of London. Apparently at Bristol and at Nottingham the hall of the gild existed side by side with the burghal moot-hall.6 If it were true to say that the importance of the burghal moot declined while that of the gild increased, it might still be untrue to say that the officials and governors of the gild became the officials and governors of the borough.

The fact that the liber burgus and the gilda mercatoria were occasionally granted separately seems to show that the Edition: current; Page: [179] two were regarded as distinct.1 The mayor and burgesses of Macclesfield, in answer to the Earl of Chester in the twenty-fourth of Edward III, claim (a) liber burgus, and (b) gild, not only as distinct things, but for distinct reasons.2

But although gild and borough were not identical, they were sufficiently similar to deceive Coke.

“Et fuit bien observe,” he reported, “que dauncient temps inhabitants ou Burgesses d’un ville ou Burgh fuerent incorporat quant le Roy graunt a eux daver Guildam Mercatoriam.”3

This dictum was faithfully followed in 1705 by Holt, C. J., in the case of the Mayor of Winton v. Wilks. The defendant was accused of having carried on a trade without being a member of the gild-merchant. “The Court was moved in arrest of judgment, and the Judges observed that when in ancient times the king granted to the inhabitants of a villa or borough to have Gildam Mercatoriam, they were by that incorporated, but what it signified in this declaration nobody knew.”4

This opinion of Coke appears untenable. To suppose that the possession of any one of the incidents of corporateness necessarily implied the existence of a corporation is inaccurate. A similar error was cherished with regard to the possession of a Firma Burgi.5 The possession of this, one of the franchises of a fully incorporated borough, was from the time of Edward IV considered to imply municipal incorporation. The rights of having a mayor, of being toll-free, and of using a corporate name,6 appear in like manner to have been considered to imply the legal incorporation of a borough, although in fact the possession of such rights might leave a borough still far from true corporateness.

The existence of burghal privileges and burghal property raised the question in whom such privileges and property vested. Gradually men had ceased in this connection to speak of the “burgesses and their heirs,” and spoke rather of the “burgesses and their successors.”1 In many towns there was a steady municipal income derived from various sources.2 It was something to be able to distribute this, and perhaps to share in the distribution. It was something to be a burgess. In consequence citizenship became restricted. Mere geographical connection with the community was not necessarily a sufficient qualification. A town would contain many men who were not freemen of it. The freedom of a city was heritable, though not strictly hereditary, because a man and his son might both be freemen simultaneously.3 Freedom was most usually obtained by transmission from father to eldest son or from a master to his apprentice: in other words, in these two cases less restrictions, and perhaps less entrance-fees, were imposed upon the aspirant to citizenship.4

To restrict the numbers and to close up the ranks of the burgesses was to knit them together as members of an organisation now highly complex and ready for the new foreign theory of corporateness. Much of this effect is due to the influence of the gild. The gild-merchant may not have included all the burgesses, and may not have excluded all the non-burgesses, but it existed in order to work the common borough trade to the best common advantage. Edition: current; Page: [181] It may not have been the mainspring of burghal corporateness, it may not have provided the borough with a ready-made system of government, but it undoubtedly taught the borough some practical lessons. For the gild was the grand example of voluntary association.1 In an age when men were “drilled and regimented into communities in order that the State might be strong and the land might have peace,”2 it arose spontaneously3 and bound men together by ties of social, religious, and commercial support. The feudal system had supported the theory that all power and all right came from above, and was entrusted by God to Pope and Emperor, to be by them in turn transmitted down through a series of chosen agents. But men felt that they had power and rights within themselves, underived from such sources as these: this feeling, finding expression in the principle of voluntary association, triumphed over feudalism and theocratism.4

This form of voluntary association had one striking feature. The associates bound themselves by oath.5 The gildsman swore in a certain formula, promised to obey common rules and to support the gild,6 paid his entrance-fee and thus became a member. This method of making membership personal and basing it upon a definite ceremony, spread to the borough, where citizenship could no longer satisfactorily Edition: current; Page: [182] be defined according to the quantity of land held or the quality of the tenure.

The adoption of this ceremony and oath by the borough had considerable consequences. Any ill-dealing between fellow-freemen was a violation of that oath, which might be punished by the body of freemen or their representatives. It might or might not be breach of law: it was certainly breach of contract: it was treason to the community. Moreover the man who took an oath on entering the citizenship found himself resembling the monk who took vows on entering a religious house.1 This was one more power at work to bring the borough into line with the more technically corporate ecclesiastical body.

Artificial membership tended to make an artificial community. The time was coming when the English borough was fit to receive the Italian doctrine,—when its personality might be deemed a persona ficta.2

56.: EARLY FORMS OF PARTNERSHIP1

DURING the Middle Ages contracts of partnership were common, and at their close companies with freely alienable shares had come into existence. In the early centuries the most common form of partnership was the “commenda.” This was a partnership in which one of the parties supplied the capital either in the shape of money or goods, without personally taking an active part in the operations of the society, while the other party supplied none or only a smaller fraction of the capital and conducted the actual trade of the association. This form of partnership was especially used in maritime trade and was often confined to single ventures. Its popularity was due to the fact that it enabled the capitalist to turn his money to good account without violating the canonical laws against usury, and the small merchant or shipper to secure credit and to transfer the risk of the venture to the capitalist. The nature of the contract will best be shown by quoting one or two examples of the vast number of these contracts that have been preserved.

The following is a Marseilles contract of the year 1210:

“Notum sit cunctis quod ego Bonetus Pellicerius confiteor et recognosco me habuisse et recepisse in comanda, a te Stephano de Mandoil et a te Bernardo Baldo, xxv l. regalium coronatorum . . . quas ego portabo ad laborandum in hoc itinere Bogie, is nave de Estella, vel ubicumque navis ierit causa negotiandi, ad vestrum proficuum et meum, ad fortunam dei et ad usum maris, et totum lucrum et capitale convenio Edition: current; Page: [184] et promitto reducere in potestatem vestri et vestrorum fideliter, et veritatem inde vobis dicam, et ita hoc me observaturum in mea bona fide per stipulationem promitto, et in omni lucro quod Deus ibi dederit, debeo habere et accipere quartum denarium.”1

Such contracts were not rare in Italy in the 12th century and the contracts are to the same intent as those of Marseilles in the 13th century. “March 1155. Ego Petrus de Tolosi profiteor me accepisse a te Ottone Bono libras centum viginti septem quas debeo portare laboratum Salernum vel ex hinc apud Siceliam, et de proficuo quod ibi deus dederit debeo habere quartam et reditum debeo mittere in tua potestate.”2

Often when both parties to the contract contributed to the capital of the association the partnership was termed “collegantia,” or “societas,” to distinguish it from the more common form of commenda in which the commendator alone supplied the funds.

“Bonus Johannes Malfuastus et Bonus Senior Rubeus contraxerunt societatem, in quam Bonus Johannes libras 34 et Bonus Senior libras 16 contulit. Hanc societatem portare debet Alexandriam laboratum nominatus Bonus Senior et inde Januam venire debet. Capitali extracto proficuum et persone (?) per medium. Ultra confessus est nominatus Bonus Senior quod portat de rebus nominati Boni Johannis libr. 20 sol. 13 de quibus debet habere quartam proficui—. Juravit insuper ipse Bonus Senior quod supradictam societatem et commendacionem diligenter salvabit et promovebit societatem ad proficuum sui et Boni johannis et commendacionem ad proficuum ipsius Boni johannis et quod societatem omnem et ipsam commendacionem et proficuum in potestatem reducet ipsius Boni Johannis.”3

But whether the commendator alone or both parties contributed to the capital, the association remained essentially Edition: current; Page: [185] of the same character. The commendator in both cases was a kind of sleeping partner, and it was left to the “tractor” to carry out all the necessary operations. Though the partnership was generally formed for the purpose of a definite speculation, it was also formed for an indefinite series of commercial transactions, or for as indefinite or sometimes a definite time, which was occasionally as long as 10 years.1

As a rule the commendator who supplied the capital took the risk of the transaction; if the goods were lost he could not recover the amount he had advanced, provided that the contract contained the usual clause “ad risicum et fortunam Dei, maris et gentium,” or its equivalent. The usual share in the profits of a tractator who brought no capital into the partnership was a quarter, while in the case where he contributed to the general fund, his share of the profits amounted to a half. It is hard to tell whether the “tractator” in early times always traded in his own name, though there is no doubt that in later times he did.2 Pertile holds the view that originally the tractator was regarded as a mere factor of the commendator who was responsible for the acts of the tractator, but that gradually in the course of time the principle was established that he was only responsible to the amount of the capital which he had advanced.3 In Florence this principle was definitely established by statute in 1408. In the medieval commenda was represented both the dormant partner and the principle of limited liability of modern times. The commenda was not confined to England:4 it existed during the Middle Ages in Germany and Scandinavia.5 In cases where there were several commendators who entrusted their capital to one or more tractators, the latter began to assume Edition: current; Page: [186] a more independent position towards commendators. Contracting in their own name the managers were responsible for the debts of the association, while the commendators were freed, in Florence as early as 1408, from all liability beyond the amount of their quota. This type of commenda was a natural development of the simple original type in which there were but two persons involved,—a single commendator who advanced the capital to a single tractator; but it was an important development, and in the 16th century it was regulated in Italy by several city statutes and in the following century in France by regulation.1 Thus regulated the society contained both members with limited liability and members with unlimited liability, and it was the latter that controlled the administration of the society. The older and simpler form of commenda, however, existed side by side with the newer and more complex type. Of the newer type the modern “Société en commandite” is the historical descendant and it is characterised by the same essential features, the existence of two classes of members, the one with a responsibility limited to the amount of the capital they have contributed, and the other with an unlimited liability for the debts of the society, the administration of which lies solely in their hands.2 On the other hand the commendator of the older and simple type of commenda has his counterpart in the dormant partner of modern commercial law.

But side by side with the commenda there existed throughout the Middle Ages a closer kind of partnership in which the partners were normally coordinate members of the association with the same privileges and responsibilities. The usual expression for this type of society was “compagnia” or “societas,” and the firm was generally designated by the name of one of its members with the addition of the phrase “et socii,” or the like. It became an essential feature of this form of partnership that the partners were all of them responsible individually for the debts of the firm.3 At no time in Italy was the power of partners to bind by contract their Edition: current; Page: [187] fellow partners in practice denied.1 The principle of direct representation was thus admitted, and Baldo writing in the 14th century declared “ex consuetudine mercatorum unus socius scribit nomen alterius.”2 Baldo however adds that this was “abusio.” This was an important advance upon the principles of both Roman and old Germanic law, neither of which recognised sufficiently the principle of direct representation. “All this view of the law,” says Kohler writing of the principle of representation, “appears altogether artificial and cannot well appeal to primitive man: he cannot understand a transaction (based) upon the will of another; even a developed law like Roman law has only developed ‘representation’ very imperfectly and German law long resisted it.”3 Medieval merchants and mercantile usage recognised the principle of representation; they recognised it not only in the right of one partner to make contracts binding upon the other partners of a firm, they also recognised it in the medieval bills of exchange with their clauses to order or bearer.

As the names of all partners did not appear4 in the name of the firm, but were simply referred to generally in the phrase “et socii” or some equivalent expression, it became important to determine who were to be legally regarded as members of the firm. In early Italian statutes actual common trading of the persons concerned, or general notoriety, sufficed to prove the partnership: “et intellegantur socii qui in eadem statione vel negotiatione morantur vel Edition: current; Page: [188] mercantur ad invicem.”1 In doubtful cases the books of the firm were consulted.2 But general notoriety and the books of the firm were not found sufficient either to protect the general public against partners who denied the partnership altogether or who asserted that the partnership had been dissolved, or to protect merchants from a general liability for all the debts of a trader with whom they occasionally combined for the purpose of a common speculation. Dissolution of partnerships was to be valid only if effected “per instrumentum publicum.” “If any one practising in the Calimala craft,” says a Florentine gild statute of 1301, “or having a share in any ‘societas’ of that craft has renounced or shall renounce it in the future, such renunciation shall not be valid nor be admitted by the consuls, unless he shall show that he withdrew from that firm by means of a public document, and the consuls shall have that document published throughout the whole craft.” Registration of partners became usual; from the 14th century onwards such registers were kept not merely by the gilds but by the city authorities; and the registration required, as a rule, “the direct intervention either personally or by special procuration of all the members of the firm.”3

It has been stated that one partner could represent the rest and make contracts binding upon the whole firm, and that this was an advance upon the principles of Roman and Germanic law, which only recognised representation to a limited degree. But though a single partner could thus represent the firm, originally it was as a rule only in virtue of special procuration that he was privileged so to do. In the medieval contracts of partnership the partners often gave one another by procuration the right to represent and bind the firm. In the absence of such clauses in the contract creditors of the firm for a debt contracted by an individual partner could in some places only make good their claim against the firm as Edition: current; Page: [189] a whole, if the debt had been recognised as a debt of the firm, as by entry in the firm’s book, or employment of the money or goods for the common purposes of the firm. Simply in his capacity as partner a merchant had not everywhere in the early centuries of the Middle Ages a right to bind his copartners. “Whoever in the city or district of Florence,” declares a Florence gild regulation of the year 1236, “has sold cloth or other things pertaining to trade to any one of this gild cannot seek nor sue for the money or price of the sale from any of the partners of the buyer, or from any one of his firm, unless the money shall be found written in the books of the buyer’s firm as payable for the price of that sale.”1 Similarly the gild statute of Verona for the year 1318 required the tacit consent of the other partners or an express promise on their part to pay—“nec praejudicet etiam stando in statione et essendo socius palam; dummodo non esset praesens cum socio ad accipiendam mercandiam et non promitteret de solvendo eam.”

As late as the 15th century the jurist Alexander Tartagnus denies the responsibility of the other partners, unless the contract had been made with full powers “nomine societatis.”2 Slowly however the principle gained ground that a partner had as partner the right to make contracts binding upon his firm. In all probability this change was due to the frequency with which the individual partner was entrusted with this power by special procuration. Thus in one of the Marseilles documents of the 13th century which have been already referred to, two partners concede full powers to the third. “Nos Dietavivo Alberto et Guidaloto Guidi, Senenses facimus, constituimus, ordinamus, Bellinchonum Charrenconi, consocium nostrum, absentem, nostrum certum et generalem Edition: current; Page: [190] procuratorem in omnibus nostris negotiis peragendis, . . . promittentes nos ratum perpetuo habitaturos quicquid cum eo vel per eum actum fuerit in praemissis, sub obligacione omnium bonorum meorum praesentium et futurorum.”1 Such procurations were exceedingly common,2 and the great Calimala Gild of Florence went so far as to instruct (1301) all its members when they sent any one abroad to transact business to provide them with a special or general procuration. The result was that in actual practice the partner did have power to bind the firm, and that gradually this power was regarded as a matter of course. During the 14th and 15th centuries numerous Italian statutes recognised the responsibility of the other partners for the debts and contracts made by an individual member of the firm. But both the doctrine of the great civil jurists and the decisions of isolated commercial courts were long opposed to this new view of the position of the partner. Thus the decisions of the “Rota of Genoa” only go so far as to say that whatever is written by one of them having the “facultas” of using the name of the firm is said to be written by the firm itself, while another decision declares most plainly that such “facultas” is not to be taken as a matter of course. By the 17th century however the power of an individual partner, though without special procuration, to act in the name of his firm was admitted by the civil jurists.3 The unlimited liability of the partner for the debts of the firm was, like the right of the partner as partner to represent the firm, of gradual growth, and was not in the early centuries of the Middle Ages universally enforced by the law.4 In medieval contracts unlimited liability was indeed often stipulated and was in some places a maxim of the law: in the fairs of Champagne, for example, the unlimited responsibility of partners was under certain conditions expressly recognised; the “usage of the fairs” declared that a partner “oblige tous leurs biens (i. e. the partners) pour cause de l’administration qu’il a et qu’il semble avoir, et plus, se aulcun Edition: current; Page: [191] des compaignons se boute en franchise ou destourne ses biens ou les biens de sa compagnye, il est oblige et tout li autre compaignon qui paravant cette fuite ou tel destournement des biens n’estoient obligez en corps et en biens par la coustume, stille et usaige des foires notoires.”1 It was not however till towards the close of the 16th century that the solidarity of partners was in Italy generally recognised. “Only gradually and without the support of positive law the liability of every partner ‘in solidum’ came through mercantile usage to be enforced in statutes and judicial decisions. This liability was repeatedly recognised in the decisions of Genoa. Since that time it was never a matter of doubt,”2 and in the 17th century the jurist Ansaldus who, as auditor of the Roman Rota, must have had a thorough acquaintance with judicial decisions in commercial cases, recognised this unlimited liability and declared that in the first place the creditor had recourse to the capital of the firm, and only in the second place could he avail himself of the unlimited liability of the individual partner.3

The commenda and the societas had an independent origin and an independent development. Originally the commenda was a purely speculative enterprise, confined mainly at first to maritime trade in which one partner found all or most of the capital and the other traded in his own name. The societas on the other hand had its root in the more permanent association of the family or of persons who had full confidence in each other for the purpose of carrying on, in common, industrial and commercial enterprises in city or town. Both extended the scope of their application, commendas were formed for inland trade and partnerships of the collective type for maritime commerce. Each however developed on its own lines. In the commenda, where from the first the capitalist must have as a rule remained unknown to the merchants who traded with the active partner, the limited liability of the capitalist and the unlimited Edition: current; Page: [192] liability of the active partner were before long firmly established, while in the open “societas” the right of the individual partner to represent and bind the firm on the one hand, and on the other his unlimited liability for its debts, were finally recognised. Both types, modified in points of detail, have passed into modern commercial life. If the commenda has developed into the “Société en commandite,” the “societas” has its historical counterpart in the modern “Société en nom collectif” and the Offene Gesellschaft.

A third type of partnership, that of joint-stock companies with the capital in the shape of freely alienable shares, with a liability limited to the amount of capital represented by the share, and with an administrative governing body composed of shareholders in which the majority decided, was in process of formation during the Middle Ages.

To the origin of this type of partnership many causes contributed, but the decisive cause was the growth of colonial enterprises in Italy in the 15th century, and in Holland, France and England in the 16th and 17th centuries. A recent German writer1 has attributed a great influence upon the birth and development of these companies to a peculiar form of partnership with limited liability that in shipping enterprises was common both in Northern and Southern Europe during the earlier part of the Middle Ages. At Amalfi, for example, in the 11th century the owners, the captain, and even the common sailors all had a share in the profits of the voyage and formed an association whose liability was strictly limited.2 But it can hardly be said that the adoption of this peculiar form of partnership had a great influence upon the formation of joint-stock enterprises. No doubt it offered an example of a partnership with limited liability, but so did the far more common commenda; and the essence of a joint-stock company does not consist in the principle of limited responsibility, but rather in the prolongation of the corporate existence Edition: current; Page: [193] and organisation of the company beyond the life of its members and in the free negotiability of the shares.

Of greater influence were the public loans1 raised by Italian cities during the 13th and following centuries. The loans were divided into shares (luoghi) and the names of the owners were registered in special books. The shares not only passed to the heirs in case of the owner’s death, but could be freely bought and sold; and as negotiable shares, even though they cannot in any sense be regarded as shares in a commercial speculation, they showed the keen commercial mind of the Italian an expedient that might be adopted for raising capital for commercial as well as for military purposes. It was in Genoa that the first joint-stock companies arose. To cover the cost of the conquest of Chios and Phocaea (1346) a loan was raised by the Genoan state and as usual was divided into shares of 100 lires, and the shareholders were given the “dominium utile” of the conquered lands. This Colonial company, incorporated with the bank of St. George in 1513, continued to exploit the resources of the two islands until their conquest by the Turks in the 16th century. Far more important however was the founding of the great bank of St. George in 1407 when the various state loans were consolidated into a single state debt. As security for the interest the city granted important privileges to the holders of the new consolidated stock, which was divided into shares of 100 lires. The stockholders were granted the right (1408) to carry on banking business, and especially after 1453 the administration and exploitation of important Genoan colonies passed into their hands. The creditors of the Genoan state had become the shareholders of a great colonial company which ultimately governed and administered Corsica, Kaffa and the greater part of the foreign dominions of Genoa.2

Colonial expansion in England, France and Holland led, though much later, to the creation of companies similar to that of Genoa. The Compagnie des Iles d’Amérique, which seems to be the earliest example in France, was created in Edition: current; Page: [194] 1626 and was rapidly followed by others of the same type.1 The Dutch East India Company (1602) was but little earlier. In England the East India Company2 received a royal charter in the opening year of the 17th century. At first the company could hardly be considered as a joint-stock company; for in the early years of its history the voyages were separate and not necessarily permanent ventures of the subscribers, who contributed varying amounts to the capital required for the expedition and received a proportionate share of the proceeds when the expedition returned. A shareholder in one of the early expeditions might or might not be a shareholder in the next. In 1613 the first so-called joint-stock was subscribed; but the term is misleading; it was not a subscription of permanent capital. As late as the middle of the 17th century subscribers wished to carry on separate trade in ships of their own, but the company protested and in 1654 a decision of the council of state was given “in favour of joint-stock management and exclusive trading.”

It would seem that joint-stock companies took their rise owing to colonial expansion in Italy at the close of the Middle Ages, and had spread to Holland, France and England by the 17th century. The history of the development3 and of the gradual extension of this form of partnership from projects of colonisation to commercial undertakings of every kind and variety lies outside the scope of this essay. But it is interesting to note that that system of partnership that now controls most of the great commercial and industrial enterprises of modern life, that has popularised and democratised capital and enabled the savings of the people as a whole to be applied to commercial speculations, great and small, of every kind, and that has changed the whole nature of commercial finance, was in its origin the outcome of state necessities and of colonial expansion.

57.: THE HISTORY OF THE LAW OF BUSINESS CORPORATIONS BEFORE 18001

58.: HISTORY OF THE LAW OF PRIVATE CORPORATIONS IN THE COLONIES AND STATES1

THE law of corporations was the law of their being for the four original New England colonies. Of whatever else they might be ignorant, every man, woman, and child must know something of that. It governed all the relations of life. This was true, whether the government to which they were subject was set up under a charter from the crown or those who held a royal patent,3 or—as in New Haven—was a theocratic republic, owing its authority to the consent of the inhabitants. The one rested on the law of private corporations de jure: the other on that of public corporations de facto.

On October 25, 1639, the first General Court of the plantation of New Haven was organized, and on October 26, an Indian was arrested under its authority on a charge of murder. Three days later he was tried and sentenced, and the day following his head was cut off “and pittched upon a pole in the markett-place.”4 We may be sure that this was not done by such men as Eaton and Davenport, nor the steps Edition: current; Page: [237] taken that put them in a position in which they might be called upon to take such action, without careful study, first, of the powers rightfully belonging to de facto public corporations.

For all the charter governments, the seventeenth century, as has been suggested in Chapter II., was one long school of study for their leaders into the rights of private corporations as founders of colonies, and then into those of the colonies as they grew into public corporations—or provinces hardly distinguishable from public corporations1—and received, as such, new authority from the Crown. Occasions arose upon which they sought counsel as to points of this kind from the leaders of the English bar, and the opinions thus obtained were eagerly read and everywhere discussed, not only by those in authority, but by their constituents in every local community.2

That the colonists thought and studied on these problems for themselves is evidenced by a letter from the General Court of Massachusetts to the counsel whom they had retained to defend against quo warranto proceedings brought for a forfeiture of the colony charter in 1683. He had been authorized to engage professional assistance, and “we question not,” they wrote, “but the counsel which you retain will consult my Lord Coke his Fourth Part, about the Isle of Man, and of Guernsey, Jersey, and Gascoigne, while in the possession of the Kings of England: where it is concluded by the Judges, that these, being extra regnum, cannot be adjudged at the King’s Bench, nor can appeal lie from them, &c.”3

The question met and decided for itself by the Colony of New Haven at its outset was answered in the same way by the charter governments with which she soon became confederated, Edition: current; Page: [238] and into one of which she was finally absorbed. They claimed and exercised from the first the power of life and death as respects all crimes committed within their territorial limits; but to do so, it was necessary to found it on the general grant to them of legislative authority. The view repeatedly urged upon the home government in opposition to this contention, that the charters contemplated only the making of such by-laws as a trading corporation might need for its better regulation,1 was certainly plausible, and their use as the foundation of capital sentences was disputed before the Queen in Council in an attack upon the Connecticut charter as late as 1705.2

The Englishman’s right to local self-government, wherever he was, was the question fundamentally at issue, and as to that, the general sentiment was the same throughout all the colonies. Ultimately it led to a gradual undermining of the authority of the provincial Governors and their Councils, which prepared the way for American independence.

Even after that event, however, and when the political sovereignty of the United States and of each of them had been fully acknowledged by Great Britain, the English courts continued to insist that the colonies had never occupied the position of public governments. Maryland, in the first half of the eighteenth century, had put out circulating bills, as currency, on the security of shipments of tobacco, the proceeds of which were invested in stock of the Bank of England held by trustees appointed for the purpose. The title of the State of Maryland to this stock came in question before the English Court of Chancery some years after the Treaty of Peace. If the doctrine of public law that a change in the political government of a people does not affect its proprietary rights or obligations was to apply, the equitable interest in the shares belonged to the State. It was held by Lord Loughborough that it did not apply. “The old government of Maryland,” he said, “a government of a singular species, existing by Letters Patent, in some degree similar to a corporation, possessing rights in England, must sue in Edition: current; Page: [239] England, and ought to be regulated by the law of England, under which it has its existence.”1 Under that law, in his opinion, the new State could not be regarded as its lawful successor in title.

Lord Eldon, in referring to this case some years later, summarized it as deciding “that the property in question, which was stock in a London corporation held by English trustees, as it belonged originally to a corporation existing by the King’s charter, was not to be transferred to the State of Maryland after the Treaty of Peace of 1783, as that State did not exist by the King’s authority; but constituted bona vacantia, and fell to the Crown.”2

In this known attitude of the English courts, early taken and always maintained, reflecting, as it did, the attitude of the English Crown, we find one of the divisive forces leading to the Revolution. Opposed to it from the first was an American doctrine of colonial and corporate rights, rooted in Massachusetts Bay, and emphasizing the political and public character of our local governments. The better to repress its growth, the mother country, about the year 1680,3 determined to make applicable here the system of appeals to the King in Council, which she had devised for the better regulation of what remained of her French possessions,—the Channel Islands. That, under their charters, their proceedings were thus subject to review, some of the American colonies at first denied, and it took nearly half a century for the Crown to establish it as unquestionable.4

This contest against a royal prerogative, the maintenance of which all now must admit to have been then indispensable to the preservation of proper relations between England and her colonies, was one of the chief causes of a bill brought into the House of Lords by the ministry in 1701, to bring back under the direct control of the throne, by means of royal Edition: current; Page: [240] Governors, all those of the American colonies not already subject to those so appointed.1

By this time it was becoming the custom for each colony to keep in commission an agent at London to watch proceedings at court or in Parliament, and represent its interests wherever they might be concerned. One of them, Sir Henry Ashurst, procured leave for Connecticut to be heard by counsel at the bar of the House against this bill, and it was defeated, largely by raising the cry that its enactment would afford a precedent alarming to all the chartered corporations in England.2

A few years later, in 1714, a similar measure was again introduced and again defeated. The main object of that was to get rid of the proprietary government in Carolina; but the Northern colonies, in carefully prepared “cases,” copies of which have recently been found among the MSS. in the Bodleian library, successfully opposed it, insisting, among other grounds, upon this: that while it was true that if a charter held as private property were revoked for reasons of State policy, due compensation could be made to those divested of their franchises; yet, as those of the New England Colonies were vested in the body of the people, no equivalent for their loss could be provided.3

Questions like these were too large for the American lawyers of those days to handle. They belonged rather to statesmen. Franklin was perhaps the first of our countrymen to deserve that name, and he discussed them with more force than could any of the bar. There were indeed few in America during the first half of the eighteenth century who could be called lawyers.4 Those who had come over in the original companies of planters had passed away. There were no facilities for legal education in this country, and no inducement to incur the expense of seeking one in the Inns of Court at London, for our colonial courts were held by men little versed in law, and often, like the Roman prætors, holding judicial office as an incident of civil office.

The few controversies that might still arise before our domestic tribunals upon the construction and effect of colonial charters or grants belonged rather to the domain of public law. There was slight occasion, except as a mere matter of speculative inquiry, to study the principles governing private corporations, until such bodies were constituted by our own legislatures. The law of municipal corporations, however, became somewhat earlier a subject of investigation.1 The practice of the proprietaries, Governors, or legislatures in every colony, almost from the beginning of the eighteenth century had established it as one of their prerogatives to confer upon the owners or inhabitants of any political division of territory within their jurisdiction the attribute of legal personality.2 This is the essence of every corporation and, to understand all that it implies, some knowledge of the scientific conceptions of jurisprudence is quite necessary.

A franchise of this kind must come from the sovereign power of the State, either directly or by delegation. Such a delegation was fairly implied in favor of the creation of political agencies for local government like towns and cities. But if for these purposes, why not for any which were political and governmental?

This line of reasoning early led to the incorporation of religious societies for the support of churches in most of the colonies, and was followed by Massachusetts, in 1639, so far as to induce the incorporation of a military company, and then of Harvard College, in 1650.

But by this last step a new field was clearly invaded. A college had always been considered by English law as something belonging to the field of ecclesiastical order and superintendence, and to be set up only by special permission from the highest authority. To found such institutions had been claimed as a papal prerogative. After the Reformation certainly, it belonged solely to the Crown. A college could only be founded by license from the King.3 His title, in the Edition: current; Page: [242] form adopted by Henry VIII., was, inter alia, “Fidei Defensor, in terra Ecclesiæ Anglicanæ & Hiberniæ supremum caput;”1 and in an ecclesiastical commission issued as late as 1728 we find George II. styling himself, yet more offensively, “supremum ecclesiæ in terris caput.”2 It is probable that Massachusetts only ventured on the incorporation of Harvard because the execution of Charles I. had extinguished for the time, and, she hoped, for all time, the royal prerogative, and replaced it by the form of a free commonwealth. She paid dearly for this. In the next reign she was called to account for it and certain other excesses of authority, before the Lord Chancellor, on a writ of scire facias, and in 1684 a judgment was entered against her for the cancellation of her colonial charter.3

In 1701, when the plan for establishing a college in Connecticut was taking shape, this ill consequence of the foundation of Harvard was in all men’s minds, and explains the care to avoid giving any definite form of incorporation to the ten Trustees or “Undertakers,” in the Act of the Assembly which is commonly called the first charter of Yale.4

Similar caution dictated the general policy of all the colonial legislatures in matters of this description. Down to 1741, when Parliament intervened and absolutely forbade for the future any American grants of corporate privileges for business purposes,5 there had been but three such, and during the whole of the eighteenth century, including the period subsequent to the Declaration of Independence, the number granted probably did not exceed two hundred and fifty.

A list of these charters, from the first settlements down to 1799, inclusive, which is believed to be approximately correct, follows this chapter and may serve to show how slowly the American business corporation became a factor in our economic life I am aware of no published record of an Edition: current; Page: [243] action at law in which one of them appeared as a party in our courts before 1790.1 By the first decade of the next century such forms of litigation became common, and four such cases appear in one volume of the Connecticut Law Reports,2 which were heard in or before 1809.

Long before the days of the Revolution, many of the enterprises in which the colonists became engaged were so extensive that they could hardly have been undertaken without the aid of aggregated capital, contributed by many, but managed by a few. This was done in rare instances under an English charter, but commonly by means of voluntary associations in the nature of partnerships, acting under a company name. One of the earliest of those of the latter description was the Undertakers of the Iron Works, who were given special privileges by the General Court of Massachusetts soon after the establishment of the Colony. The first grant was in 1643, and a later one, which has sometimes, though I think erroneously, been termed a charter of incorporation, was obtained in 1645. They soon found it necessary to call their managing agent to account in a suit demanding a balance of £13,000 from him, and their affairs occupied much of the time of the General Court for ten or twelve years. They sued in the names of certain persons as their deputies and attorneys, and it was apparently conceded that those who were full partners in the enterprise were personally liable to the creditors of the concern.3

Similar privileges were afterwards given to other undertakers, engaged in the same kind of mining.4

In 1670 a committee of the General Court was authorized to treat with certain “adventurers” who had asked for special privileges as manufacturers of salt, as to granting them a charter, but nothing further was done in regard to it.5

One of these partnership companies was formed for banking Edition: current; Page: [244] purposes in Massachusetts, under the license or sanction of Governor Dudley in 1686.1

In the same year we find in the early records of Pennsylvania one instance of an attempt of a number of landholders to combine without any public license or authority for the joint management and disposition of their interests, under a common seal. The agreement for this purpose was executed at Frankfort-on-the-Main in 1686; probably in ignorance of the English law of incorporation. The name assumed was “The Frankfort Company,” and it appeared under this designation in a suit in the colonial courts in 1708,2 but never, I believe, received a charter.

In 1688, Wait Winthrop and other inhabitants of Massachusetts united with Sir Matthew Dudley and others in England, in a petition to the Crown for a charter of incorporation for a trading company with authority to open mines in New England. The colony instructed its agent at court to object to the grant, urging that any such charter tended to create a monopoly and enhance prices, and trenched upon the field of government. The Attorney-General was consulted by the Lords of Trade and Plantations in regard to the matter, and gave an opinion that there was no legal objection, but the petition was finally rejected in 1703.3

The Ohio Company was incorporated in England in 1749, by a royal charter, for the purpose of dealing in American lands and effecting settlements beyond the Alleghanies, its capital stock being divided into twenty shares.4 The other land companies whose names often appear in our colonial history were, it is believed, with one exception,5 all voluntary associations. Of these, perhaps the best known was the Indiana Company, but it consisted simply of a number of sufferers from Indian depredations, who accepted a grant of three million acres in what is now Indiana from the Six Edition: current; Page: [245] Nations in satisfaction of their claims. The conveyance was made to the King in trust for them according to their respective interests, and the suit brought in the Supreme Court of the United States in 1793 against the State of Virginia to enforce their title was instituted in the names of the equitable owners as individuals.1

Among the moneyed companies with a considerable capital, but unincorporated, which were engaged in active business during the colonial period, several of the most prominent were in Maryland. The Patapsco Iron Works Company, sometimes called the Baltimore Company, was an important concern there as early as 1731.2 Another was the Potomac Company, or Potomac Canal Company, formed for improving the navigation of the Potomac River in 1762,3 and finally incorporated in 1784;4 and a third also deserves mention, the partnership known in 1781 as the Principio Company.

5Some of these associations received from the colonial authorities almost all the attributes of corporations, except what it was thought impossible to confer, that of artificial personality. Similar privileges were also bestowed on tenants in common of landed property. Thus in 1709, the General Assembly of Connecticut gave the major part of the proprietors of the Simsbury copper mines power to appoint annually a committee with the powers for their management now usual for a board of directors, and even erected a special court to determine any differences that might arise between the owners or those with whom they dealt.6

Adjoining proprietors of low lands or on a water-course were not infrequently given power to associate for improving their property in such manner as a majority might determine. Some of these drain companies were made quasicorporations, Edition: current; Page: [246] and could sue in the name of the treasurer. They were really public agencies, created on account of the interest of the State in regulating a use of land or water shared in by many under separate titles, and it was no part of their purpose to make money for their members. Indeed, their powers extended over those who might not desire to come into them, precisely as is the case with municipal corporations.1

It was one of the greatest of the voluntary joint-stock companies, the “Manufacturing Company” or Land-bank of Massachusetts, whose issue of circulating bills in 1740, against the protest of the royal Governor, to the amount of nearly £50,000, led to the Act of 1741, which has been already mentioned.2 This made unlawful the establishment of or transaction of business by any unincorporated jointstock company, having transferable shares, and consisting of over six persons. Any one violating the statute was subject to the penalties of præmunire, that is, of confiscation and imprisonment, and to payment of treble damages to any merchant suffering by his acts.3 This continued to be the law of the land for every American Colony until the Revolution.

The earliest moneyed corporation, formed for the profit of its members to come into existence on this continent, under a legislative charter, was the “New London Society United for Trade and Commerce in Connecticut,” incorporated perpetually in 1732. It was a rash act. The society was formed for trading with any of “his Majesties Dominions, and for encouraging the Fishery, &c., as well for the common good as their own private interest.”4 It proceeded to Edition: current; Page: [247] set up a land-bank and issue circulating notes, and with consequences so disastrous to the currency of the colony that after a single year the charter was declared forfeited and repealed, a special court of chancery being organized ad litem to wind up its affairs and do what justice it could to the unfortunate billholders.1 The General Assembly also resolved that “although a corporation may make a fraternity for the management of trades, arts, mysteries, endowed with authority to regulate themselves in the management thereof: yet (inasmuch as all companies of merchants are made at home by letters patent from the King, and we know not of one single instance of any government in the plantations doing such a thing), that it is, at least, very doubtful whether we have authority to make such a society; and hazardous, therefore, for this government to presume upon it.”2

This reference to fraternities was probably made in view of certain action taken by the General Court of Massachusetts in the previous century. That was a grant of license to the shoemakers of Boston to form a guild for the better regulation of their trade, and investing them with a monopoly of the market. It was made in 1648 and was to endure for three years only. There was no capital stock, no provision for a common seal, no specification of the name to be assumed, nor were any words used that were indicative of an intention to constitute a legal corporation. Similar privileges were granted at the same session to the coopers of Boston and Charlestown.3

Pennsylvania, in 1768, ventured to incorporate a fire insurance company;4 but not till the Continental Congress led the way was there to be found, after 1741, a commercial corporation of any magnitude under an American charter. In 1781 came the Bank of North America, with an authorized Edition: current; Page: [248] capital of $10,000,000, incorporated by the United States, and soon reincorporated by Pennsylvania.

Up to this time, the only branch of corporation law which had been of real importance in the United States, except that concerning public (including municipal) corporations, was the law of religious societies. These had been freely incorporated both by the royal Governors and the colonial Assemblies, and soon acquired considerable possessions, some of them receiving public grants.1 In the Colonies where there was an established church, charters for any of a different character were obtained with difficulty. The Earl of Bellomont, when Governor of New York, wrote in 1698 to the Lords Commissioners of Trade and Plantations, of one procured by a Dutch Reformed Church from one of his predecessors (and as it was hinted by means of a present of plate) that such a grant was a very extraordinary proceeding “for it is setting up a petty jurisdiction to fly into the face of the government.”2

There were also two missionary societies chartered in England for operations in America, which were much before the public eye. One was “the President and Society for Propagating the Gospel in New England and Parts adjacent” incorporated in 1659 under the Commonwealth, and rechartered soon after the Restoration. This was in the hands of the dissenters.3 The other, the “Society for the Propagation of the Gospel in Foreign Parts,” was chartered in 1701, in the interest of the Church of England, by the procurement of an American clergyman, the Rev. Dr. Thomas Bray, Commissary of the Bishop of London for Maryland.4 This soon sent its missionaries over all the colonies. Grants of land were occasionally made to it, and it not infrequently stood behind the parish clergy, when they were setting up the claims of the church to property which had been devoted to pious uses.5

It has been already said that the large business enterprises of the earlier colonists had been managed through the form of voluntary association in a joint-stock company. Such organizations were good at common law, and when the Act of Parliament by which they were prohibited in the colonies after 1741 fell with the Revolution, the old practice was naturally resumed.

Alexander Hamilton organized in this manner the Bank of New York,1 which did a large business without a charter until 1791.

Land companies were formed in the same way. The Connecticut Gore Land Company, which bought in 1795 the Connecticut title to a long gore of territory west of the Delaware River, was one of this kind, and the conveyance was taken to five of the members, in behalf of all the shareholders.2

The table appended to this chapter shows that no considerable impulse towards the granting of business charters was felt in any of the United States until after the adoption of the national Constitution. This first put our foreign commerce and that between the States upon a solid footing. It first also gave to capital a sense of security, for the government which it replaced had been found from the first too weak even to protect itself.

The States, however, for many years after 1789 dealt such charters out with a sparing hand, and most of the large business enterprises were still carried on by voluntary associations. The cumbersome methods of combining capital which were endured originally from the cost of getting a royal charter were followed after the Revolution, largely by the force of tradition. At the opening of the two centuries of which this volume particularly treats, there had been but three joint-stock commercial companies under full charters existing in England,3 and the monopolies enjoyed by the “regulated” companies had fallen under the ban of the Parliament which came in with William and Mary. So Edition: current; Page: [250] late as 1717 the Attorney-General and Solicitor-General had advised the rejection of an application for the incorporation of a London marine insurance company, as being a dangerous experiment.1 It took the descendants of the English colonists in America a long time to emancipate themselves from their inherited prejudices against private corporations. It was the same sentiment that put so many restrictions against voting in proportion to stock interests into our earlier charters, and which looks to-day with disfavor and suspicion upon the modern “trust,” whether its business be fairly or unfairly conducted.

Of the charters granted prior to 1800 for moneyed corporations, two-thirds were of a quasi-public character, and such as carried or might properly have carried the right of eminent domain. Most of these were for the improvement of transportation facilities by roads, bridges, and canals, or by deepening rivers or harbors. Of the corporations whose business would bring them into daily contact with the people at large, irrespective of locality, there were less than eighty, the most considerable of which were twenty-eight banks and twenty-five insurance companies.

By this time, however, the number of public and municipal corporations, religious societies, academies, library companies, and public quasi-corporations, such as drain companies, had become very large, and probably approached two thousand. The principle of freedom of incorporation or organization under general laws had been applied to them in several of the States, although only extended thus far to a single class of private corporations, and by a single State.2

What now had been accomplished towards the formation of an American law of corporations by the close of the eighteenth century?

Law is the philosophy of society. It must reflect the political and economic views of the State for which it speaks, or it speaks in vain. It must answer the needs of the people Edition: current; Page: [251] who are subject to it, or they will throw it aside. Under the English and American system of government to keep Law and Society in adjustment to each other is mainly the office of the Judges. The people believe that their will is, on the whole, more faithfully interpreted and fulfilled by courts than by legislatures. The legislature hears the loudest talkers, and hurries to the relief of the last sufferer, without always stopping to consider how helping him will affect the rest of the community. The courts act more slowly. They do not act at all unless parties in interest have had a fair opportunity to be heard. They take that judicial notice of the lessons of history and the nature of things, which stands for the common knowledge and common sense of the people at large. They administer a science which rests on reason, and proclaims as one of its fundamental principles: Cessante ratione, cessat et ipsa lex.1

It was with these powers that the American judiciary first took up the work of bringing the English law of corporations into harmony with the social conditions of the colonies.

Our political conditions differed widely from those of the mother country: our social conditions more widely still.

There one class of corporations—the corporation sole—had been created for the benefit of an hereditary crown and an established church. We had got rid of one, and were, wherever the other still existed, steadily advancing towards its destruction.

The English corporation held its franchise as a special favor. It was of the nature of a monopoly; perhaps a reward for party service; perhaps gained by a purchase for which some minister or court favorite received the price.

The American corporation could only come into existence legitimately for the public good. Such franchises, under the principles of our government, could only be dealt out with an equal hand.

These considerations early led our courts to certain definite Edition: current; Page: [252] conclusions as to the nature of corporate rights, which differed essentially from those of English law.

Before the Revolution the people had accustomed themselves to the assertion that their charters had made them certain irrevocable grants, one of which was that they were to possess all the rights and privileges of Englishmen. From this standpoint, it was a logical conclusion that they could not be taxed without their own consent. To do so was to alter the colonial charters, and in the language of Franklin, they could not be altered, “but by consent of both parties, the King and the colonies.”1 An executed grant is inviolable because it is a contract. The party who made it has lost certain rights; the party who received and accepted it has acquired them; and each must stand by his bargain.

The same effect was attributed under the proprietary charters, both to them and to such charters as the proprietaries might themselves grant by their delegated authority.2 President Clap in 1763 had set up, and successfully, a similar claim as to the charter of Yale College, when the General Assembly were threatening to amend it without the consent of the corporation.3

Here then was one fait accompli. It became such by the Revolution, if not before it. The Declaration of Independence proclaimed this doctrine of the inviolability of grants of franchises, when it gave as a reason for renouncing all allegiance to George III. that he had assented to Acts of Parliament “for taking away our charters . . . and altering fundamentally the powers of our governments.”

A different theory was asserted and acted upon by Pennsylvania in 1785, when she repealed the charter which she had granted to the Bank of North America, notwithstanding the masterly argument of James Wilson in support of its vested rights.4 Two years later, however, the injustice was Edition: current; Page: [253] redressed by a new charter, and as soon as the question whether a charter was a contract came before a judicial body it was unhesitatingly (in the Dartmouth College Case) decided to be such, and therefore to be inviolable.1

Another doctrine may be said to have become established by popular acquiescence before the opening of the nineteenth century. It is that a corporation can acquire a legal existence under the laws of several States, by accepting a charter from each; and so in each be a corporation, although holding its meetings in but one of them.

The first of these organizations was the Bank of North America, chartered first by the Congress of the United States in 1781, and then in 1782 by Pennsylvania2 and New York, and in 1786 by Delaware. This is still in existence under the form of a national banking association. Another was “The Corporation for the Relief of the Widows and Children of Clergymen in the Communion of the Church of England in America,” which received charters from New York, New Jersey, and Pennsylvania (1785). Each authorized the annual meetings to be held in any of these States, according to such rotation as it might appoint.3 This organization was found to be unwieldy, and in 1797, by concurrent legislation on the part of these three States, provision was made for dividing it into three new corporations. The method devised, as set forth in the new Pennsylvania charter,4 was a grant from each State to its citizens, who were members of the “aggregate” or in modern parlance “consolidated” corporation, to draw off and form a separate one, on such terms as they might agree on with their fellow-members from New York and New Jersey for the division of the corporate funds. When such a division should be agreed on, the seal of the old corporation was to be broken, and the Pennsylvania citizens were to become “The Corporation for the Relief of the Widows and Children in the Communion of the Protestant Episcopal Church in the Commonwealth of Pennsylvania,” with a new seal of their own.

The courts of the nineteenth century have often had occasion to define the nature and incidents of such consolidated corporations; but they were an inheritance from the century before, and in that the legal conception of a dual personality in bodies of this nature had become familiar.

In respect to the powers of legislation granted by the colonial charters, the popular construction, as has been seen, had always favored extreme liberality. This was in accordance with the general English doctrine that as a corporation was a person, it had all the rights of a person, in the absence of a particular exception or prohibition. This lay at the root of much of the opposition to the ratification of the Constitution of the United States. As Patrick Henry put it, in addressing the Virginia Convention, the Congress which it created could do everything that it was not forbidden to do.1 But as soon as the courts set themselves to constructing an American theory of corporate personality, the judicial position became antagonistic to what had been the common opinion before the Revolution. All our circumstances were changed. It had been our interest to make the most and claim the most of whatever franchises we had obtained from the Crown or the agents of the Crown. Americans had been only recipients of corporate privileges. Now they began to be givers, also. They had been but too glad to repeat the doctrine of the English Judges that corporations possessed power to do anything which they had not been expressly or by fair implication forbidden to do.2 Their own Judges now began to assert that corporations could do nothing which they were not expressly or by fair implication authorized to do.3

Starting with this assumption there was less to fear from free grants of corporate franchises. They could be used for the proper purposes of the corporation, but for those only. Hence the principle of free incorporation under general laws early found its way into American legislation, while Edition: current; Page: [255] even now it is in England subject to great restrictions. Hence also special charters have been far more freely granted with us, and corporation law has become a much more important and extensive branch of jurisprudence.1 Hence also the corporations of one State were for a long time encouraged to engage freely in business in any of the others, and are still admitted for this purpose on easy terms.2 Up to 1839, on the other hand, no case was to be found in the English reports of a suit brought by a foreign corporation on an English contract.3

The first general incorporation law, since the days of Queen Elizabeth, was enacted by New York in 1784. Delaware followed in the same line in 1787,4 and Pennsylvania in 1791.5 The system thus early inaugurated and since so extensively pursued, of free incorporation, offered to all on equal terms, removed the foundations of the common-law doctrine that to charter a corporation indicated special confidence in those named as corporators, and so implied a trust in the artificial person thus created which justified a liberal construction of its rights and powers. In its application to municipal corporations not only was this view early abandoned by our courts, but they have gone to what might be regarded as the other extreme and hold that no powers are implied in their favor which are not either such that their possession is necessary for the proper exercise of those expressly granted, or indispensable to the fulfilment of the public purposes to be attained.6

Other References on the Subject of this Part are as Follows:

History of the Common Law Theory of Contract, by C. Morse (Canada Law Journal, 1903, XXXIX, 379-395).

The Doctrine of Consideration, in English Law, by E. Jenks (London, 1892), cc. III, IV.

The Foundations of Legal Liability, by T. A. Street (Northport, 1906), vol. II, cc. I-IV, vol. III, cc. X-XVI.

59.: THE HISTORY OF ASSUMPSIT1

60.: THE HISTORY OF PAROL CONTRACTS PRIOR TO ASSUMPSIT1

IT is generally agreed by the Continental writers that in early German law, from which our law comes, only real and formal contracts were binding. The same is unquestionably true of the English common law from the time of Edward III. to the introduction of Assumpsit towards the end of the fifteenth century. But Mr. Justice Holmes in his Common Law, 260-264, and again in his essay on Early English Equity, 1 L. Q. Rev. 171-173,3 endeavors to show that the rule requiring a quid pro quo for the validity of a parol undertaking was not of universal application in England, and that a surety, in particular, might bind himself without a specialty prior to the reign of Edward III. If this opinion is well-founded, an innovation and the abolition of the innovation must be accounted for. The evidence in favor of the validity during the two centuries following the Norman Conquest, of any parol obligation which was neither based upon a quid pro quo, nor assumed in a court of record, should, therefore, be very strong to carry conviction. The evidence thus far adduced has failed to convince the present writer.

Prior to the appearance of Assumpsit the contractual remedies in English law were Debt, Detinue, Account, and Covenant. Detinue and Account, every one will agree, were Edition: current; Page: [305] based upon real contracts. Covenant lay only upon sealed instruments, that is, formal contracts. If, therefore, parol undertakings, other than real contracts, were ever recognized in early English law they must have been enforced by the action of Debt. But no instance of such an action in the royal courts, it is believed, can be found.

Glanvil, Bracton, and Britton all recognize the validity of debts founded upon a specialty.1 Glanvil also says in one place that no proof is admissible in the king’s court, if the plaintiff relies solely upon fidei laesio; and in another that the king’s court does not enforce “privatas conventiones de rebus dandis vel accipiendis in vadium vel alias hujusmodi,” unless made in that court, that is to say, unless they were contracts of record.2 Bracton makes the statement that the king’s court does not concern itself except occasionally de gratia with “stipulationes conventionales,” which may be infinite in their variety.3 The language of Fleta is most explicit against the validity of formless parol promises. “Oportet igitur ex hoc quod aliquis ex promissione teneatur ad solutionem, quod scriptura modum continens obligationis interveniat, nisi promissio illa in loco recordum habenti recognoscatur. Et non solum sufficiet scriptura, nisi sigilli munimine stipulantis roboretur cum testimonio fide dignorum.” The same principle was expressed a few years later in a case in Y. B. 3 Ed. II. 78. The plaintiff counted in Debt on a grant for £200, showing a specialty as to £140, Edition: current; Page: [306] and offering suit as to the rest. Frisk, for defendant, said: “Every grant and every demand by reason of grant must be by specialty, but of other contracts,1 as of bailment or loan, one may demand by suit. Therefore as you demand this debt by reason of grant and show no specialty but of part, judgment,” etc. The plaintiff was nonsuited. In Y. B. 2 Ed. III 4-5, Aldeburgh (Judge of C. B. four years later) said: “If one binds oneself to another in a debt in presence of people ‘sans cause et sans especialtie,’ never shall an action arise from this.” The same doctrine is repeated in later cases in the fourteenth century.2 In the light of these authorities it seems highly improbable that Debt was ever maintainable in the king’s court, unless the plaintiff could show either a specialty or a quid pro quo received by the defendant.3

In the essay upon Early English Equity, already referred to, the distinguished writer makes the further suggestion that, although the formless parol undertakings ultimately failed of recognition in the King’s Courts, the Church for a long time, with varying success, claimed a general jurisdiction in cases of læsio fidei; and that after the Church was finally cut down to marriages and wills, the clerical Chancellors asserted for a time in Chancery the power of enforcing parol agreements, for which the ordinary King’s courts afforded no remedy. It is believed that undue importance has been attached to the proceedings in the spiritual court for læsio fidei. It is doubtless true that this court was eager to enlarge its jurisdiction, and to deal with cases of breach of faith not properly within its cognizance. We may also concede that the court was sometimes successful in keeping control of such cases when the defendant did not dispute the jurisdiction. But the authorities would seem to make it clear that from the time of the Constitutions of Clarendon, a prohibition would issue as a matter of course from the King’s Court upon the application of one who was drawn into the spiritual court upon breach of faith in a purely temporal matter.1

Nor has the present writer been able to discover any traceable connection between the ecclesiastical claim of jurisdiction over læsio fidei and the jurisdiction of the Chancellor in the matter of parol agreements. If the Chancellor proceeded in the same spirit as the ecclesiastical judge, purely upon the ground of breach of faith, it would follow that in the absence of a remedy at common law, equity would give relief upon any and all agreements, even upon gratuitous parol promises. And Mr. Justice Holmes seems to have so interpreted the Edition: current; Page: [308] following statement, which he cites from the Diversity of Courts (Chancery): “A man shall have remedy in Chancery for covenants made without specialty, if the party have sufficient witness to prove the covenants, and yet he is without remedy at the common law;” for he adds that the contrary was soon afterwards decided, citing Cary, 7: “Upon nudum pactum there ought to be no more help in Chancery than there is at the common law.”1 But, without all deference, the passage in the Diversity of Courts seems to have been misapprehended. There is really no contrariety between that passage and the extract from Cary. It is not asserted in the Diversity of Courts that one should have remedy for all parol covenants, where there was no remedy at common law. Full effect is given to the language used if it is taken to import that relief was given upon some parol covenants. So interpreted the Diversity of Courts accords with other authorities. For while it is confidently submitted that no instance can be found prior to the time of Lord Eldon2 in which Equity gave relief upon a gratuitous parol promise, it is certainly true that Chancery did in some cases furnish a remedy upon parol covenants. But in all these Chancery cases it will be found that the promisee, acting in reliance upon the promise, had incurred expense, or otherwise parted with property, and that the Chancellor, upon an obvious principle of natural justice, compelled the promisor to make reparation for the loss caused by his breach of promise. Three such instances, between 1377 and 1468, are mentioned in an essay upon “The History of Assumpsit,” in an earlier3 Edition: current; Page: [309] part of this Collection. Those instances might have been supplemented by three similar cases which were brought to light by Mr. S. R. Bird.1 In Gardyner v. Keche (1452-1454), Margaret and Alice Gardyner promised to pay the defendant £22, who on his part was to take Alice to wife. The defendant, after receiving the £22, “meaning but craft and disceyt,” married another woman, “to the great disceyt of the said suppliants, and ageyne all good reason and conscience.” The defendant was compelled to answer the bill. In Leinster v. Narborough (circa 1480), the defendant being betrothed to the plaintiff’s daughter-in-law, but desiring to go to Padua to study law, requested the plaintiff to maintain his fiancée, and a maid-servant to attend upon her during his absence, and promised to repay upon his return all costs and charges incurred by the plaintiff in that behalf. The defendant returning after ten years declined to fulfil his promise, and the plaintiff filed his bill for reimbursement, and was successful.2 In James v. Morgan (1504-1515), the defendant promised the plaintiff 100 marks if he would marry his daughter Elizabeth. The plaintiff accordingly “resorted to the said Elizabeth to his great costs and charges,” and “thorow the desavebull comforde” of the defendant and his daughter delivered to the latter jewels, ribbons, and many other small tokens. Elizabeth having married another man through the “crafty and false meane” of the defendant, the plaintiff by his bill sought to recover the value of his tokens, and also the “gret costs and charges thorow his manyfold journeys.”

In all these cases there was, it is true, a breach of promise. But there seems to be no reason to suppose that the Chancellors, in giving relief, were influenced, even unconsciously, by any recollection of ecclesiastical traditions in regard to læsio fidei. It was so obviously just that one who had intentionally misled another to his detriment should make good the loss, that we need not go further afield for an explanation of the Chancellor’s readiness to give a remedy upon such Edition: current; Page: [310] parol agreements. In A little Treatise concerning Writs of Subpœna,1 written shortly after 1523,—that is, at about the same time as the Diversity of Courts,—occurs the following instructive passage:—

Here the subpœna is allowed in the absence of a promise. There could, therefore, be no question of breach of faith. But the money having been paid and received under the expectation of both parties that the plaintiff would get a valid transfer of the rent, it was plainly just that equity should not permit the defendant to rely on the absence of a remedy at common law as a means of enriching himself at the expense of the plaintiff.

It is hardly necessary to remind the learned reader of the analogy between the case just considered, and uses arising upon a bargain and sale, which were supported for the first time only a few years before.2 It was doubtless the same principle of preventing unjust enrichment which led the Chancellor in the reign of Henry V. to give a legal sanction Edition: current; Page: [311] to the duty of the feoffee to uses which before that time had been a purely honorary obligation.

To sum up, then, the Ecclesiastical Court had no jurisdiction over agreements relating to temporal matters. Chancery gave relief upon parol agreements only upon the ground of compelling reparation for what was regarded as a tort to the plaintiff, or upon the principle of preventing the unjust enrichment of the defendant; and the common law, prior to Assumpsit, recognized only those parol contracts which were based upon a quid pro quo.

The jurisdiction of Equity was rarely invoked upon breaches of promises after the development of Assumpsit, unless specific performance of the contract was desired. We have only to consider, therefore, the nature of the common-law real contracts which were enforced by the actions of Debt, Detinue, and Account.

It is not necessary to deal specially with Account, since the essential principles of that action have been clearly and fully set forth by Professor Langdell in the Harvard Law Review.1 It will suffice to emphasize the fact that a defendant’s duty to account, whether as bailiff or receiver, arose from his receipt of property as a trustee, and that a plaintiff entitled to an account was strictly a cestui que trust. In other words, trusts for the payment of money were enforced at common law long before Chancery gave effect to trusts of land. It need not surprise us, therefore, to find that upon the delivery of money by A to B to the use of C, or to be delivered to C, C might maintain an action of Account against B.2 Account against a receiver was long ago superseded by the common count for money had and received by the defendant to the use of the plaintiff. But the words “to the use of” still bear witness to the trust relation.

Detinue was usually founded upon the contract of bailment. Edition: current; Page: [312] This contract was a real contract by reason of the delivery of a chattel by the bailor to the bailee. The duty of the bailee was commonly to redeliver the same chattel to the bailor, either upon demand or at some time fixed by the terms of the bailment. But the chattel might be delivered to the bailee to be delivered to a third person, in which case the third person was allowed to maintain Detinue against the bailee.1

Detinue would also lie against a seller upon a bargain and sale. Here it was the payment of the purchase-money that as a rule constituted the quid pro quo for the seller’s duty to suffer the buyer to take possession of the chattel sold. If the bargain was for the reciprocal exchange of chattels, the delivery of the chattel by the one party would be as effective a quid pro quo as payment of purchase-money to support an action of Detinue against the other party. It was hardly an extension of principle to treat the delivery of the buyer’s sealed obligation for the amount of the purchase-money as equivalent to actual payment of money, or delivery of a chattel, and accordingly we find in Y. B. 21 Edward III. 12-2, the following statement by Thorpe (Chief Justice of the Common Bench in 30 Edward III.): “If I make you an obligation for £40 for certain merchandise bought of you, and you will not deliver the merchandise, I cannot justify the detainer of the money; but you shall recover by a writ of Debt against me, and I shall be put to my action against you for the thing bought by a writ of Detinue of chattels.” But it was a radical departure from established traditions to permit a buyer to sue in Detinue when there was merely a parol bargain of sale without the delivery of a physical res of any sort to the seller. But this striking change had been accomplished by the time of Henry VI. The new doctrine may be even older,2 but there seems to be no earlier expression of it in the books than the following statement by Fortescue, Edition: current; Page: [313] C. J.: “If I buy a horse of you, the property is straightway in me, and for this you shall have a writ of Debt for the money, and I shall have Detinue for the horse on this bargain.”1 From the mutuality of the obligations growing out of the parol bargain without more, one might be tempted to believe that the English law had developed the consensual contract more than a century before the earliest reported case of Assumpsit upon mutual promises.2 But this would be a misconception. The right of the buyer to maintain Detinue, and the corresponding right of the seller to sue in Debt were not conceived of by the medieval lawyers as arising from mutual promises, but as resulting from reciprocal grants,—each party’s grant of a right forming the quid pro quo for the corresponding duty of the other.3

It remains to consider the most prominent of all the English real contracts, the simple contract debt. The writ in Debt, like writs for the recovery of land, was a praecipe quod reddat. The judgment for the plaintiff is that he recover his debt. In other words, as in the case of real actions, the defendant was conceived of as having in his possession something belonging to the plaintiff which he might not rightfully keep, but ought to surrender. This doubtless explains why the duty of a debtor was always for the payment of a Edition: current; Page: [314] definite amount of money or a fixed quantity of chattels.1 A promise to pay as much as certain goods or services were worth would never support a count in Debt.2 In Y. B. 12 Edw. IV. 9-22, Brian, C. J., said: “If I bring cloth to a tailor to have a cloak made, if the price is not determined beforehand that I shall pay for the making, he shall not have an action of Debt against me.”3 For the same reason, the quantum meruit and quantum valebant counts seem never to have gained a footing among the common counts in Debt, and in Assumpsit the quantum meruit and quantum valebant counts were distinguished from the indebitatus counts. But principle afterwards yielded so far to convenience that it became the practice to declare in Indebitatus Assumpsit when no price had been fixed by the parties, the verdict of the jury being treated as equivalent to a determination of the parties at the time of bargain.

The ancient conception of a creditor’s claim in Debt as analogous to a real right manifested itself in the rule that a plaintiff must prove at the trial the precise amount to be due which he demanded in his præcipe quod reddat. If he demanded a debt of £20 and proved a debt of £19, he failed as effectually as if he had declared in Detinue for the recovery of a horse and could prove only the detention of a cow.4 Edition: current; Page: [315] For the same reasons Debt would not lie for money payable by instalments, until the time of payment of the last instalment had elapsed, the whole amount to be paid being regarded as an entire sum, or single thing.1

The quid pro quo which the debtor must receive to create his duty might consist of anything that the law could regard as a substantial benefit to him. Debts were usually founded upon a loan of money, a sale, a lease of property to the debtor, or upon work and labor performed for him. The quid pro quo in all these cases is obvious.2 The execution of a release by an obligee to an obligor was also a sufficient quid pro quo to create a new debt between the same parties.3 Forbearance to sue on a claim has been regarded in the same light: “for the forbearing of a suit is as beneficial in saving, as some other things would have been in gaining.”4

But Debt will not lie upon mutual promises. In Smith v. Airey,5 “Holt, C. J., said that winning money at play did not raise a debt, nor was debt ever brought for money won at play, and an Indebitatus Assumpsit would not lie for it; but the only ground of the action in such cases was the mutual promises. That though there were a promise, yet Debt would not lie upon that.” According to another report of the same case Lord Holt said, “There is no way in the Edition: current; Page: [316] world to recover money won at play but by special Assumpsit.”1

Originally there was no quid pro quo to create a debt against a defendant if the benefit was conferred upon a third person, although at the defendant’s request. Y. B. 9 Henry V. 14-23 is a case in point. The plaintiff, having a claim for £10 against T, released the claim upon the defendant’s promise to pay him the same amount. The plaintiff failed because the benefit of the release was received by T.2 In Y. B. 27 Henry VIII. 23, upon similar facts, Fitz-James, C. J., thought the plaintiff should recover in an action on the case upon the promise, but not in Debt, “for there is no contract,3 nor has the defendant quid pro quo.” Post, J., and Spelman, J., on the other hand, thought there was a quid pro quo. It was also made a question, on the same ground, whether a defendant who promised money to the plaintiff if he would marry the defendant’s daughter was liable in Debt to the plaintiff who married the daughter.4 But here, too, the opinion finally prevailed that though the girl got the husband, her father did receive a substantial benefit.5 In Y. B. 37 Henry VI. 9-18, Moyle, J., said: “If I say to a Surgeon that if he will go to one J who is ill, and give him medicine and make him safe and sound, he shall have 100 shillings, now if the Surgeon gives J the medicines and makes Edition: current; Page: [317] him safe and sound, he shall have a good action [Debt] against me for the 100 shillings, and still the thing is to another and not to the defendant himself, and so he has not quid pro quo, but the same in effect.” This reasoning of Moyle, J., met with general favor, and it became a settled rule that whatever would constitute a quid pro quo, if rendered to the defendant himself, would be none the less a quid pro quo, though furnished to a third person, provided that it was furnished at the defendant’s request, and that the third person incurred no liability therefor to the plaintiff. Accordingly, a father was liable for physic provided for his daughter;1 a mother for board furnished to her son;2 a woman was charged in Debt by a tailor for embroidering a gown for her daughter’s maid;3 a defendant was liable for instruction given at his request to the children of a stranger, or for marrying a poor virgin.4 The common count for money paid by the plaintiff to another at the defendant’s request is another familiar illustration of the rule.

But it is an indispensable condition of the defendant’s liability in Debt in cases where another person received the actual benefit, that this other person should not himself be liable to the plaintiff for the benefit received. For in that event the third person would be the debtor, and one quid pro quo cannot give rise to two distinct debts.5 Accordingly where the plaintiff declared in Debt against A for money lent to B at A’s request, his declaration was adjudged bad; for a loan to B necessarily implied that B was the debtor. If B was, in truth, the debtor, the plaintiff should have declared in Special Assumpsit against A on the collateral promise. If B was not the debtor, the count against A should have been for money paid to B at A’s request.6 By Edition: current; Page: [318] the same reasoning it would be improper to count against A for goods sold to B at A’s request. If B was really the buyer, the seller should charge him in Debt, and A in Special Assumpsit on the collateral promise. If B was not the buyer, the count against A should be for goods delivered to B at A’s request.1 The same distinction holds good as to services rendered to B at A’s request. If B is a debtor A is not, but only collaterally liable in Assumpsit.2

The distinction between Debt and Special Assumpsit, as illustrated in the cases mentioned in the preceding paragraph, is of practical value in determining whether a promise is in certain cases within the Statute of Frauds relating to guaranties. If B gets the enjoyment of the benefit furnished by the plaintiff at A’s request, but A is the only party liable to the plaintiff, A’s promise is not within the statute. If, on the other hand, B is liable to the plaintiff for the benefit received, that is, is a debtor, A’s promise is clearly a guaranty and within the statute.3

There were obviously many parol agreements that did not come within the scope of Debt, Detinue, or Account. This difficulty was at length met by the action of Assumpsit, which became, indeed, a remedy upon all parol agreements.4 But the distinction between Debt and Assumpsit is fundamental. For, while Assumpsit might always be brought where Debt would lie upon a simple contract, the converse Edition: current; Page: [319] is not true. There were many cases where Assumpsit was the only remedy. Assumpsit would lie both where the plaintiff had incurred a detriment upon the faith of the defendant’s promise, and where the defendant had received a benefit. Debt would lie only in the latter class of cases. In other words, Debt could be brought only upon a real contract,—Assumpsit upon any parol contract.

61.: THE HISTORY OF CONTRACT1

THE modern law of contract consists of a general theory, forming the bond of union between numerous, and otherwise unconnected, classes of contracts. This general theory is posterior in date to, and different in origin and history from, the particular contracts which it comprehends. Buying and borrowing, pledging and suretyship, cannot wait for the development of a refined system of law, and these processes must have been regulated by definite principles long before they were embraced in a comprehensive generalization. A complete history of contract must therefore consist of two parts. With the first of these, consisting in an enquiry into the origin and mode of development of the different species of contracts, we have not here to do. Our attention will be confined to the rise of the general principles that have given system and unity to the mass of detail.

The general theory of contract is almost entirely of domestic origin. In Bracton and Fleta indeed we find an attempt to employ the general principles of the Roman Law as a setting for English contracts,3 but the chief significance of this Edition: current; Page: [321] attempt lies in its failure. Perhaps in no other part of the law have Roman principles been so prominently introduced, only to be so completely rejected. The English law was thus left to fashion a theory of contract for itself. The manner in which it did so is an excellent illustration of the operation of modes of procedure in determining the development and form of the substantive law, for the history of the law of contract is almost entirely comprised in that of three forms of action. These are Debt, Covenant, and Assumpsit.

The first of these can be traced back to the beginnings of the law, but the earliest fact respecting it which need here be noticed is its division into the two actions of debt and detinue. Save for obscure hints in Bracton and Fleta,1 there seems to be no reference to this division in the early legal writers, though it appears as well established in the Year Books of Edward I.2 It was based, not, as is often said,3 on the distinction between money and chattels, but apparently on that between obligation and property. Detinue was an action for the recovery of money or chattels of which the plaintiff had the ownership; debt for the recovery of money or chattels over which the plaintiff’s right was merely in personam.4 This division had important effects upon the law of contract, for it is evident that all bailments would be relegated to the action of detinue. Now this action played no part in the development of the theory of contract, and bailments consequently remained outside that theory until the rise of the action of assumpsit restored them to their rightful position as a class of contracts. Furthermore this removal of bailments rendered possible, as will be seen later, an important generalization within the action of debt. It is evident that debt, as the general remedy for all obligations that gave rise to liquidated claims, must have had a scope in some respects wider and in some narrower than the sphere of contract. Since, however, the cases in which it was the remedy for Edition: current; Page: [322] causes of action not contractual were comparatively unimportant, they may be here neglected.

In every action of debt two elements were originally necessary, a justa causa debendi and a legal proof.1 There were within historical times two principal modes of proof, the carta or written acknowledgment, and the secta or train of witnesses. It is to this fact that we owe the distinction between specialty debts and debts on simple contract. With respect to the causae debendi the most important fact to be noticed is that among them the early law did not include a promise or agreement. The idea of the obligatory nature of a mere executory agreement seems to have been unknown, and part performance was a condition precedent to the existence of an obligation.2 Indeed it is doubtful whether an agreement was in any distinct manner recognised as an element of debt, or whether any conscious distinction was drawn between obligations ex contractu and any other form of obligation.3 It was an accident of procedure that first introduced into the law the principle of enforcing mere promises. A written acknowledgment of a debt, or written promise to pay it, was obviously the best evidence that could be obtained, and by a transition very natural to early law it passed from the position of good evidence to that of conclusive proof. This appears from Bracton: ‘Per scripturam vero obligatur quis, ut si quis scripserit alicui se debere, sive pecunia numerata sit sive non, obligatur ex scriptura, nec habebit exceptionem pecuniae non numeratae contra scripturam, quia scripsit se debere.’4 The obvious effect of this rule of evidence upon the substantive law was that a written promise to pay ceased to be a mere proof of an already existing debt, and became a causa debendi itself. Thus was introduced into the English law a formal contract, and it would seem that to this same application of estoppel early law is largely indebted for this class of contract. Thus in Edition: current; Page: [323] the law of Rome the contract literis and the release by acceptilatio are undoubted instances of the process,1 though to extend the same explanation to the stipulation might be overbold.

In debts proved by good suit, on the other hand, it remained necessary to allege an independent causa debendi. ‘En dette sur contract le plaintiff monstra in son count pur quel cause le defendant devient son dettour. Autrement in dette sur obligation, car l’obligation est contract in luy meme.’2 What then were these causae? To give a complete list of them is impracticable, but they were such transactions as sale, barter, loan (mutuum), and hiring of services. The common feature of them all was something given or done on one side in return for something to be given or done on the other. A generalization of the causae debendi was therefore possible, and this resulted in the well-known doctrine of quid pro quo. It was laid down that debt on a simple contract did not lie unless the defendant had received something in recompense for the obligation sought to be enforced against him.3 The cause that led to this explicit statement of what had been implicit from the earliest times was probably the disturbing influence of the idea that simple contract debts were really based upon promises, and the consequent necessity of defining the limits within which a promise was obligatory. In the early theory of contract quid pro quo, as yet ungeneralized, was the principal; the promise, if recognised at all, merely the accessory. With the progress of legal theory, however, this relation became reversed, and quid pro quo assumed the aspect of a limitation upon the binding effect of promises.

The exact date of this generalization is uncertain. What seems the earliest mention of the term occurs in 39 Ed. III,4 where however it is unconnected with contract. In 9 Hen. Edition: current; Page: [324] V1 debt was brought by a plaintiff who had released a judgment debtor on the promise of the defendant to become debtor in his stead. It was held that this was not sufficient matter in law to charge the defendant. This is a good example of the kind of case that must have led to the formulation of the doctrine of quid pro quo, but the report makes no use of that expression. In 7 Hen. VI we find an objection made to the absence of quid pro quo, though not in an action of debt,2 and thirty years later the rule is treated as perfectly familiar.3 In 16 Ed. IV4 it is remarked that ‘parols sans reason’ have no binding force. The principle in question has been somewhat hastily identified with the modern principle of consideration, but as we shall see it is very doubtful whether there is between them any historical connection whatever.

The second form of action to be considered is that of Covenant. By the time of Edward I this was fully established as a general contractual remedy by which damages could be obtained for the breach of any agreement under seal. It seems probable that this action passed into the law of contract from the law of real property, the earliest conventiones being leases of land for life or years.5 However this may be, its history as a general contractual remedy can be traced with considerable clearness in the early writers. Glanvil tells us that privatae conventiones were not enforceable.6 This assertion seems sometimes to be interpreted as meaning merely that contracts were invalid unless reduced to writing;7 but Glanvil himself defines privatae conventiones as agreements made anywhere save in the King’s Court. If not Edition: current; Page: [325] there made, no executory contract was enforceable whether reduced to writing or not. By the time of Bracton we find an advance in legal theory, for covenants are now enforced in the King’s Court not of right but occasionally de gratia. ‘Non solet aliquando necessitas imponi curiae domini regis de hujusmodi conventionibus privatis discutere. Sed tamen si quis a conventione recedat, succurritur alteri parti per actionem de conventione.’1 Finally in Fleta the foregoing passage is transcribed with an omission of all reference to the remedy being of grace rather than of right.2 Unlike debt and, as will be seen, unlike assumpsit, covenant was from the first recognised as a remedy for breach of promise. Unlike these actions therefore its origin imposed no limitation on its scope, and it threatened to become co-extensive with agreements. A limitation stringent enough however was imposed by the law of evidence. In 20 Ed. I3 a plaintiff offered good suit to prove his covenant, and it was decided that a writing was the only admissible proof of an agreement. This rule determined the whole future history of the law of contract, for it obtained recognition at a time when a writing meant a writing under seal, and covenant was thus restricted to a class of agreements that became narrower every day.

The limitations thus sought to be imposed on the law of contract proved too strait to be borne. A form of action never fashioned for that end was soon pressed into the service for which debt and covenant had proved inadequate, and this in process of time developed into the third and most important contractual remedy. Of the origin and nature of Trespass on the Case it is needless here to speak, but a subject deserving some consideration is the process by which it became a remedy for breach of contract. It was intended as a provision for those cases of damage to person or property that did not fall within the original scope of trespass. Now inasmuch as breach of contract is a fruitful source of damage to person and property, it is evident that Edition: current; Page: [326] in many instances trespass on the case must have been in reality a contractual remedy. Very frequently therefore an undertaking or assumpsit formed part of the circumstances of the case, and appeared in the count.1 This aspect of trespass on the case was early perceived, and the objection used at first to be brought that in such cases covenant was the appropriate and exclusive remedy. This, however, was overruled. Thus in 48 Ed. III, in an action against a surgeon for negligence, it is said: ‘This action of covenant is of necessity maintainable without specialty, because for every little thing a man cannot have a clerk to make a deed.’2 In a similar case in 11 Rich. II3 the contract was made in London, and the negligent performance of it occurred in Middlesex. A dispute arising as to the venue, it was decided that issue might be joined either on the assumpsit or on the ‘contrary medicines,’ and that the venue would be determined accordingly. This shows a distinct appreciation of the double character of the action, trespass from one point of view, covenant from another.

Now happened an event closely analogous to what we have already noticed in the history of debt. In trespass on the case, as in debt, a promise was not originally the cause of liability, but merely an accessory; in both actions the promise came subsequently to be regarded as the principal; and in both a consequent necessity arose of limiting the new principle by a generalized statement of the old. In debt this resulted, as has been seen, in the doctrine of quid pro-quo. In assumpsit it resulted first of all in the rule that the action lay for a breach of promise by malfeasance only, as distinguished from a breach by nonfeasance.4 This rule was evidently a recognition that the action, though from one point of view contractual, was in reality delictual. If it resulted from a mere omission, damage to the plaintiff’s person or property was not regarded as a cause of action; for, generally speaking, it is only through a contractual Edition: current; Page: [327] obligation that a man becomes liable for passively permitting another’s loss.

For a century the ‘merveillous ley’ that resulted from this distinction was subjected to a vigorous attack,1 until at last in 20 Hen. VII the efforts of the assailants proved victorious. In this year it was decided, in defiance of all precedent, that an action on the case lay for a nonfeasance. ‘If I covenant for money to build a house by such a day, and do it not, an action on the case lies for the nonfeasance.’2 This piece of judicial legislation obtained immediate recognition,3 and from this time the law of contract may be regarded as established in what is practically its modern form.

It might be supposed that after this extension assumpsit would become coextensive with parol agreements. Not so however. There is no more curious feature in the history of the English law of contract than the manner in which limitations were invariably imposed upon the scope of contractual remedies and the obligatory nature of agreements. The limitation now imposed upon assumpsit was the necessary result of the fact that it was an action ex delicto perverted into a contractual remedy. A purely delictual action is based upon detriment suffered by the plaintiff, and that detriment is the measure of damages. A purely contractual action, on the other hand, is based on breach of promise, whether accompanied by detriment or not, and the measure of damages is the benefit that would have resulted to the plaintiff from performance. The employment of an action ex delicto as a remedy for breach of contract naturally resulted in a union of these two principles; the real, though not the ostensible, cause of action continued to be injury to the plaintiff, but the amount of this injury was immaterial, for the measure of damages was, as in a true contractual action, the benefit that would have resulted from performance.4 This injury which, though an essential Edition: current; Page: [328] element, was neither the measure of damages nor the ostensible cause of action, operated as a limitation upon the action of assumpsit, and in a slightly modified form is still to be seen in the modern requirement of Consideration. It is true that valuable consideration is generally regarded as being of two kinds, only one of which consists in damage to the plaintiff. But even that form of consideration which consists in a benefit to the defendant ought logically and historically to be regarded as an injury to the plaintiff from whom it moves. And such is now the prevalent opinion. ‘Detriment to the promisee is a universal test of the sufficiency of consideration’ in assumpsit: Langdell, Summary, § 64.

The rule that assumpsit would not lie unless the plaintiff had suffered damage required and received distinct recognition on the extension of the action to nonfeasance. It was held that a breach of contract by nonfeasance, as a failure to build a house, was no ground of action unless loss had been incurred, as by prepayment of the price. In 21 Hen. VII, Chief Justice Frowike says, ‘I shall have a good action on my case by cause of the payment of the money, and without payment of the money in this case there is no remedy; and yet if he builds the house and does it badly, an action on my case lies. . . . And so it seems to me that in the case at bar the payment of the money is the cause of the action on the case.’1

It has been already said that this requirement of injury to the plaintiff, which existed in assumpsit as a relic of the Edition: current; Page: [329] original delictual character of the action, is represented with some modifications by the modern rule as to consideration. The cause and the significance of these modifications constitute the obscurest problem in the history of contract. The theory to be here advanced is that there is no historical connection between consideration and the original limitation of assumpsit, but that the former was an independent development in another part of the law, which by its strong analogy to the aforesaid limitation was enabled to introduce itself into assumpsit and to supplant the earlier principle. This process must have taken place between the end of the reign of Henry VII, when assumpsit was extended to nonfeasance, and the beginning of the reign of Elizabeth, in whose tenth year the later principle appears in an unmistakeable form.1 There can be little doubt that the idea of consideration received its first applications from the Court of Chancery, where it formed an essential part of the equitable doctrine of uses. It is needless here to enter into the details of the varied and extensive use made of this principle by equity; it is sufficient to mention the necessity for good consideration in covenants to stand seised to uses, in conveyances without declaration of uses, and in the alienation of land subject to uses. The application of consideration to the law of uses has been brought into special prominence, partly by the importance of this branch of equitable jurisdiction, and partly by the operation of the Statute of Uses; but there is no sufficient reason for supposing that this was the only equitable application of the principle. There are some grounds for believing that consideration was originally in equity, as subsequently in law, a principle of contract. That there was an equitable jurisdiction in contract is undoubted. In 8 Ed. IV2 the right to determine suits pro fidei laesione was distinctly claimed and exercised by the Chancellor. Fairfax, a judge of this reign, jealous of the growing jurisdiction, urged that the action on the case ought to be extended so as to obviate the Edition: current; Page: [330] necessity of an appeal to Chancery.1 From the Diversité de courtes2 we learn that ‘a man can have remedy in the Chancery for covenants made without specialty, if the party has sufficient proof of the covenants, since he is without remedy at the common law.’ It was doubtless in order to check the growth of this jurisdiction that the judges extended the remedy of assumpsit, as already mentioned. Fineux, one of the authors of this change, remarks that since the party can have assumpsit for a nonfeasance, ‘there will be no necessity for a subpœna.’3 On the extension of the common law action, Chancery to a large extent abandoned its jurisdiction over contracts, though a relic of it is still to be seen in the remedy of specific performance.4

There is little or no direct evidence that consideration was applied by equity to contracts, for few examples of this branch of equitable jurisdiction are to be found. It appears from the early bills in Chancery that the term consideration, with its synonym cause, was in use in contracts as early as the reign of Edward IV;5 but to what extent these words had a technical meaning, or bore reference to a definite legal principle, it is impossible to tell. In the absence of direct evidence we must fall back upon inference. Even within the law of uses we find consideration applied to contracts, for covenants to stand seised to uses (which might be by parol6) were limited by this requirement. That this was an isolated application of the principle to a single class of contracts seems a much less probable supposition than that it was merely a particular instance of a rule requiring a consideration in all contracts whatever. Furthermore the principle in question is applied by equity to contracts at the present day. As has been said, specific performance is a relic of the general equitable jurisdiction in contract. Now the application of this remedy is still limited by the requirement of consideration, a requirement Edition: current; Page: [331] more imperative than in the common law, inasmuch as it disregards the distinction between specialty and parol agreements. For the application of this principle to contracts therefore, either equity must be indebted to the law, or the law to equity. Can the former supposition be maintained, when we know that to equity is due the origin of the principle, and its varied applications throughout the law of uses, trusts, and even in particular instances contract itself?

In treating of the history of this subject it is essential to bear in mind that consideration was not what is now known as valuable consideration. It was a much wider idea, and may be defined as any motive or inducement which could be regarded as rational and sufficient. It included four principal species: first, valuable consideration; second, natural affection; third, legal obligation; and fourth, moral obligation. This wide idea was destined to undergo a process of atrophy, the result of which has been that at the present day it is practically reduced to valuable consideration, though various relics of the original doctrine are still to be met with scattered through the law. The proofs of the original form of the idea, and of its more or less complete application in this form to assumpsit, are in the main the same, and may be given together:—

At the time when its legal use originated, the word was popularly used in the wide sense above indicated. Thus in Doctor and Student:1 ‘The said statute was well and lawfully made, and upon a good reasonable consideration.’ In all probability the legal and popular uses were at first identical. Secondly, that natural affection originally formed part of the idea in question needs no proof, for even at the present day it receives nominal recognition under the title of good consideration.2 What is perhaps the first mention of consideration in the Year Books is in 20 Hen. VII, where it is said of a grant: ‘it was made on good consideration, for the elder brother is bound by the law of nature to Edition: current; Page: [332] aid and comfort his younger brother.’1 The relationship of good to valuable consideration can be satisfactorily explained only on the theory that they were originally species of a generic notion, which could not have been narrower than that above indicated. Thirdly, that consideration originally included legal obligation seems the only possible explanation of such actions as indebitatus assumpsit2 and insimul computassent.3 If the idea in question had been as narrow when these actions originated as it is now, there must have been an absurdity in alleging a debt as a consideration for a promise to pay it. Fourthly, that in certain cases moral obligation was regarded as a good consideration, may be gathered from anomalies that exist even at the present day. These and other exceptions to strict theory are commonly explained as relaxations that have been gradually permitted in the rule respecting consideration.4 But it is extremely difficult to see how such exceptions could ever have been allowed entrance into the law. A far more satisfactory explanation is that these anomalies are the relics of a wider rule that included both the modern rule and the modern exceptions to it. Such an exception is to be seen in the doctrine that a past consideration is sufficient to sustain a promise if moved by a precedent request. The first statement of this rule is reported in 10 Elizabeth. Assumpsit was brought on a promise to indemnify the plaintiff, who had previously become bail for the defendant’s servant. ‘By opinion of the court it does not lie in this matter, because there is no consideration wherefore the defendant should be charged for the debt of his servant, . . . . for the master did never make request to the plaintiff to do so much for his servant, but he did it of his own head.’5 The rule is evidently based on the idea that there is no moral obligation to recompense a benefit, and therefore no consideration for a promise to do so, unless the Edition: current; Page: [333] benefit is conferred at the request of the person benefited.1

Of the method in which this principle obtained entrance into the action of assumpsit, there seems to be little or no evidence; but if we take into account the facts that it was probably applied to contracts by equity, that the development of assumpsit was determined by the desire to absorb the equitable jurisdiction in contract, that since the Statute of Uses consideration had spread widely through the common law, and that a strong resemblance existed between consideration and the common law limitation of assumpsit, it can scarcely be a matter of surprise that the latter was finally supplanted by the former.

Had the idea of consideration proved more stable, and made successful resistance to the process by which it has been reduced to its modern limits,2 its introduction into assumpsit would have caused a profound modification of the law of contract. As it is, however, it may be said that even had this equitable principle never been borrowed by the common law, the law of contract would have been, except in one point, practically identical with what it now is. The exception lies in this, that whereas the original limitation of assumpsit consisted simply in detriment to the promisee, consideration consists in such detriment regarded as an inducement to the promise. The difference is important, for its effect was to render assumpsit inapplicable, save by reasoning approaching closely to the fictitious, to the very cases to which trespass on the case was first applied. Coggs v. Bernard is a typical example of this. Damage directly resulting from the breach of contract, as the loss of the brandy in this celebrated case, cannot of course be regarded Edition: current; Page: [334] as an inducement to the promise; and therefore, although it would have fallen within the common law limitation of assumpsit, it is no consideration.

Assuming then that the law derived consideration from equity, the question remains: Whence did equity derive the principle? It is sometimes answered: From the civil law. If this means that it resulted from an adoption or adaptation of the Roman distinction between contractus and nudum pactum, the opinion is untenable. The causæ civiles which turned pacts into contracts were incapable of generalization, and even by omitting the formal contracts we obtain only the inadequate idea of valuable consideration. The civil law supplies however another application of the term causa, which is more to the point. Money paid or property delivered sine causa could be reclaimed; and a promise made sine causa was invalid.1 This rule applied to contracts, whether formal or not. Causa was not of course restricted to valuable consideration, for this was never essential to a stipulation, but it included any adequate motive or sufficient reason. The rule rendered invalid promises made either under a mistake (sine causa ab initio) or for a valuable consideration which failed (causa data causa non secuta). Now the Canon Law expressly renounced the moribund distinction between contractus and pactum,2 and this example was followed very generally throughout Europe.3 This breakdown of the old theory would naturally call into prominence the requirement of causa, as being the only remaining limitation upon the binding efficacy of agreements; and that this was actually the case sufficiently appears from the following extract from Molina, a jurist of the sixteenth century. ‘Observant etiam Felinus . . . et doctores communiter, ut jure canonico ex pacto nudo actio concedatur, qua paciscens cogatur implere pactum, necessariam esse causae expressionem: alioquin reus non cogetur solvere, nisi Edition: current; Page: [335] actor causam sufficienter probet. . . . Quo loco observa, sufficientem causam ut solvere cogatur esse titulum donationis.’1 Molina proceeds to give examples of the rule, to identify it with the rule of the civil law already mentioned, and to call attention to the mistake made by some writers in confounding causa in this sense with the causa that was originally necessary as a vestimentum pacti. This same rule that a cause is necessary to sustain a promise is still recognised in its original form by the French law.2 An enunciation of the same principle, very significant with regard to the English law, is to be found in Doctor and Student. The Student knows nothing of consideration, but expounds the law of contract exactly as it was understood during the reign of Henry VIII. But the Doctor of Divinity speaks as follows: ‘And of other promises made to a man upon a certain consideration, if the promise be not against the law, as if A. promise to give B. 20l. because he hath made him such a house, or hath lent him such a thing, or such other like, I think him bound to keep his promise. But if his promise be so naked that there is no manner of consideration why it should be made, then I think him not bound to perform it, for it is to suppose that there was some error in the making of the promise. . . . And in all such promises it must be understood that he that made the promise intended to be bound by it, for else commonly after the doctors he is not bound, unless he were bound to it before his promise: as if a man promise to give his father a gowne that hath need of it to keep him from cold. And also such promises, if they shall bind, they must be honest, lawful, and possible, and else they are not to be holden in conscience though there be a cause. And if the promise be good and with a cause, though no worldly profit shall grow thereby to him that maketh the promise, but only a spiritual profit, as in the case before rehearsed of a promise made to an University, to a Citie, to the Church, or such other, and with a cause as to the honour of God, there is Edition: current; Page: [336] most commonly holden that an action upon these promises lieth in the Law Cannon.’1

That the principle so expounded by the doctor of divinity is identical with that which we have already found to exist in the Canon Law, there can be no doubt. Is it not almost equally obvious that it is also identical with the equitable principle of consideration? In name the two principles are the same, and in nature they are practically indistinguishable, save that consideration is not met with in equity until after the commencement of that process of contraction which finally reduced it to its modern limits. May we not conclude then that when the Chancellors, who till the reign of Henry VIII were almost invariably ecclesiastics, sought a basis on which to found their equitable jurisdiction in contract, they adopted a principle lying ready to their hands in a system of law with which they were familiar?

The theory that consideration is a modification of the Roman principle of causa, adopted by equity, and transferred thence into the common law, finds some support from Mr. Pollock in his work on Contracts,2 but is rejected by Mr. Justice Holmes,3 who attempts to prove the principle in question to be entirely an internal development of the English law of contract. The central point of Mr. Holmes’s theory is that the modern rule of consideration is merely a modification of the ancient requirement of quid pro quo in the action of debt. But to this view the objections seem almost insurmountable. It is based on a mistaken view of the original contents of the idea of consideration. Between this idea, as first understood, and quid pro quo, there is a gap too wide to be bridged by any theory of development. Furthermore, quid pro quo was a principle confined to the action of debt, while consideration (as a theory of the law of contract) was found only in assumpsit. Thirdly, this latter principle was well known in the law of property some time before it appears in contracts; it seems scarcely probable Edition: current; Page: [337] therefore that it was derived from the action of debt. Again, it is alleged that the modification by which quid pro quo became consideration was the recognition of detriment to the promisee as well as benefit to the promisor. But in debt this extension was again and again attempted without success,1 and it is not probable that it could have succeeded in assumpsit. Lastly, the two ideas in question lived on independently in their own spheres, and the clearest distinction was always drawn between them. Thus in 27 Hen. VIII it is said: ‘I understand that one cannot have a writ of debt except when there is a contract; for the defendant has not quid pro quo, but the action is founded solely on the assumption, which sounds merely in covenant.’2 Again in 27 & 28 Eliz.: ‘In assumpsit it is not necessary that they contract at the same instant, but it suffices if there be inducement enough to the promise, and although it is precedent it is not material; otherwise in debt it is requisite that the benefit come to the party, otherwise for want of a quid pro quo debt does not lie.’3 Again, as late as 4 Charles I: ‘There is no contract between them nor hath he any quid pro quo, but he ought to have had an assumpsit.’4 Could two principles have been kept so distinct, if one had been merely a modification of the other permitted by the laxity of the law?

To the later history of contract a mere allusion must suffice. Its chief feature was the temporary though prolonged disappearance of debt in favour of assumpsit in the case of simple contracts. For the purpose of avoiding the defendant’s wager of law, early attempts were made to bring assumpsit where debt was the appropriate remedy. After a struggle between the Court of King’s Bench and the Court of Exchequer Chamber,5 it was finally decided in Slade’s Case6 that an action on the case would lie although Edition: current; Page: [338] debt was available. The only subsequent change that need be mentioned is the final recognition of a single limiting principle throughout the law of contracts by the merger of quid pro quo in valuable consideration.

62.: HISTORY OF THE BENEFICIARY’S ACTION IN ASSUMPSIT1

MODERN English law, in a familiar line of decisions since the year 1724, has pronounced against the right of a third person, not a party to a contract, to maintain an action of assumpsit upon the contract, even though it was made for his benefit.3

Upon examination of these cases, the following questions are presented:

Is there any substantive right by which the beneficiary of a contract can enforce a part from the action of assumpsit?

Is the denial of the beneficiary’s right in the cases of assumpsit due to a judicial denial of the existence of such a substantive right; or is the inability of the beneficiary to Edition: current; Page: [340] recover due in reality to certain technicalities of procedure or principles of substantive law incident and peculiar to the action of assumpsit itself?

If, apart from assumpsit, there is such a substantial right of a beneficiary, what is its basis, its scope, and its limitations, and in what formal procedure or actions is it enforceable? At the present day, “Whatever disadvantages the English law on the question may have, it has at least the merit of definiteness. A beneficiary has no legal rights.”1 That the modern English judicial conscience finds satisfaction in this conclusion may be seen from the exclamation of Crompton, J.: “It would be a monstrous proposition to say that a person was a party to the contract for the purpose of suing upon it for his own advantage, and not a party to it for the purpose of being sued.”2 But why “monstrous,” if conformable to the contractors’ intent?

That the modern English courts in preventing this monstrosity believe they have not sacrificed any cherished English judicial principle appears from the repeated assurances of the modern English judges that the beneficiary cannot recover because he is “a stranger to the consideration,” and because “he is not a party to the contract.”3

Unfortunately, for judicial uniformity, the monstrosity of the proposition that a person may be entitled to sue on a contract without being himself liable to suit thereon, never shocked any judicial conscience in England until 1861.

It can be shown (conclusively, I submit), that outside of assumpsit this so-called “monstrosity” has been the law of England for five hundred years.

The line of approach in investigating the common law on this subject, lies in challenging and demanding proof for the propositions so often asserted, that:

(1) No one can recover on a contract except the person who furnishes the consideration.

(2) No one can recover on a contract except the promisee.

We find both these propositions asserted in the English decisions in the action of assumpsit. That the foregoing two propositions are invariably discussed solely from the stand-point of the action of assumpsit is apparent from any study of the opinions of the leading text-writers.

There is, however, no consensus of opinion among text-writers with respect to the truth of both propositions.1 And Edition: current; Page: [342] there is hardly any unanimity of judicial opinion among common law judges to-day upon any point involved in the subject of the beneficiary.1

That various courts of common-law origin, professedly expounding and administering that law, should reach not only contrary conclusions on this problem, but conclusions involving fundamentally antagonistic conceptions of the doctrine of Contract and of Consideration, provokes the inquiry whether the common law on the subject of the right of action of a stranger to the contract has ever been fully investigated, ascertained and presented.

So far as the question is a legal and not an equitable question, nearly all text-writers of the present day on contracts, attempt to solve the problem of the beneficiary’s right Edition: current; Page: [343] of action by the aid of or in conformity to the doctrine of consideration in special assumpsit, i. e., as a question of the law and procedure in special assumpsit. In reality, the question is one of the general substantive contract law of England and of the States inheriting that law. In point of fact, all the decisions usually cited on the right of action of the beneficiary are decisions in actions of special assumpsit and, hence, these decisions turn on the doctrine of consideration, and are controlled and limited by the judicial interpretations of that doctrine.

The citations of these assumpsit decisions therefore, proves nothing beyond the action of assumpsit; and because by the very nature of such actions they rest on the doctrine of consideration (which invariably requires that no one who has not furnished the consideration, or, at least, that no one who is not the promisee, shall have the right to maintain assumpsit), these decisions are convincing to only those who regard contract and assumpsit as identical concepts.

The real question is, however, a much broader one. Is there any substantive right of action conferred by the common law of England on the beneficiary of a contract independent of assumpsit and therefore independent of the doctrine of consideration, i. e., independent of his having furnished the consideration and of his being the promisee? “An English misunderstanding or perversion of the common law is not necessarily our law.”

The doctrine of consideration was, of course, unheard of in England until the reigns of Henry VII, Henry VIII and Elizabeth, when it came into vogue gradually, in the extension of the action on the case to promises previously unenforceable. “The name ‘consideration’ appears only about the beginning of the sixteenth century, and we do not know by what steps it became a settled term of art.”1 Outside of Edition: current; Page: [344] the action on the case and its derivative special assumpsit, it is familiar law that the doctrine of consideration was never recognized and had never been heard of or applied.

But the right of action of the beneficiary was an established right long before the doctrine of consideration existed. The right of action of the beneficiary was previously recognized and firmly established in the ancient actions of account and of debt, years before the rise of the action of Case on “Promises.” The doctrine that neither Case nor assumpsit would lie except for a consideration, and finally the definition of consideration as consisting in a detriment suffered by the plaintiff who must be the promisee, had obviously no place in the action of debt where “there was no theory of consideration, and therefore, of course, no limit to either the action or the contract based upon the nature of the consideration received.”1 No more was there any conception of “Consideration” (as we now have come to accept the term) in the action of Account.

The relation of consideration in special assumpsit to the rights of third parties will be discussed later. We shall first deal with account and debt, where consideration was of course, unknown, and examine the cases giving the beneficiary a right to sue in those actions.

63.: THE HISTORY OF AGENCY1

I PROPOSE in these lectures to study the theory of agency at common law, to the end that it may be understood upon evidence, and not merely by conjecture, and that the value of its principles may be weighed intelligently. I first shall endeavor to show why agency is a proper title in the law. I then shall give some general reasons for believing that the series of anomalies or departures from general rule which are seen wherever agency makes its appearance must be explained by some cause not manifest to common sense alone; that this cause is, in fact, the survival from ancient times of doctrines which in their earlier form embodied certain rights and liabilities of heads of families based on substantive grounds which have disappeared long since, and that in modern days these doctrines have been generalized into a fiction, which, although nothing in the world but a form of words, has reacted upon the law and has tended to carry its anomalies still farther. That fiction is, of course, that, within the scope of the agency, principle and agent are one. I next shall examine the early law of England upon every branch of the subject,—tort, contract, possession, ratification,—and show the working of survival or fiction in each. If I do not succeed in reducing the law of all these branches to a common term, I shall try to show that at least they all equally depend upon fiction for their present existence. Edition: current; Page: [369] I shall prove incidentally that agency in its narrower sense presents only a special application of the law of master and servant, and that the peculiar doctrines of both are traceable to a common source. Finally I shall give my reasons for thinking that the whole outline of the law is the resultant of a conflict at every point between logic and good sense—the one striving to work fiction out to consistent results, the other restraining and at last overcoming that effort when the results become too manifestly unjust.

A part of my task has been performed and my general view indicated in my book on the Common Law. It remains to discuss the matter systematically and in detail, giving due weight to the many difficulties or objections which are met with in the process.

My subject extends to the whole relation of master and servant—it is not confined to any one branch; so that when I choose the title “Agency,” I do not use it in the strict sense just referred to, but as embracing everything of which I intend to treat.

The first question proposed is why agency is a proper title in the law. That is to say, Does agency bring into operation any new and distinct rules of law? do the facts which constitute agency have attached to them legal effects which are peculiar to it, or is the agency only a dramatic situation to which principles of larger scope are applied? And if agency has rules of its own incapable of being further generalized, what are they?

If the law went no farther than to declare a man liable for the consequences of acts specifically commanded by him with knowledge of circumstances under which those consequences were the natural results of those acts, it would need no explanation and introduce no new principle. There may have been some difficulty in arriving at this conclusion when the intervening agent was a free person and himself responsible. Speaking without special investigation, I do not remember any case in early law in which one could charge himself thus in contract or even in tort. Taking the allied case of joint trespassers, although it long has been settled that each wrong-doer is liable for the entire damages, the objection Edition: current; Page: [370] that “the battery of one cannot be the battery of the other” prevailed as late as James I.1 It is very possible that liability even for the commanded acts of a free person first appeared as an extension of the liability of an owner for similar acts by his slave.

But however this may be, it is plain good sense to hold people answerable for wrongs which they have intentionally brought to pass, and to recognize that it is just as possible to bring wrongs to pass through free human agents as through slaves, animals, or natural forces. This is the true scope and meaning of “Qui facit per alium facit per se,” and the English law has recognized that maxim as far back as it is worth while to follow it.2 So it is only applying the general theory of tort to hold a man liable if he commands an act of which the natural consequence, under the circumstances known to him, is harm to his neighbor, although he has forbidden the harm. If a trespass results, it is as much the trespass of the principal as if it were the natural, though unwished for, effect of a train of physical causes.3 In such rases there is nothing peculiar to master and servant; similar principles have been applied where independent contractors were employed.4

No additional explanation is needed for the case of a contract specifically commanded. A difficulty has been raised concerning cases where the agent has a discretion as to the terms of the contract, and it has been called “absurd to maintain that a contract which in its exact shape emanates exclusively from a particular person is not the contract of such person [i. e., the agent], but is the contract of another.”5 But I venture to think that the absurdity is the other way, and that there is no need of any more complex machinery in such a case than where the agent is a mere Edition: current; Page: [371] messenger to express terms settled by his principal in every detail. Suppose that the principal agrees to buy a horse at a price to be fixed by another. The principal makes the contract, not the referee who settles the price. If the agreement is communicated by messenger, it makes no difference. If the messenger is himself the referee, the case is still the same. But that is the case of an agent with discretionary powers, no matter how large they may be. So far as he expresses his principal’s assent to be bound to terms to be fixed by the agent, he is a mere messenger; in fixing the terms he is a stranger to the contract, which stands on the same footing as if it had been made before his personal function began. The agent is simply a voice affording the marks provided by the principal’s own expression of what he undertakes. Suppose a wager determined in amount as well as event by the spinning of a teetotum, and to be off if numbers are turned up outside certain limits; is it the contract of the teetotum?

If agency is a proper title of our corpus juris, its peculiarities must be sought in doctrines that go farther than any yet mentioned. Such doctrines are to be found in each of the great departments of the law. In tort, masters are held answerable for conduct on the part of their servants, which they not only have not authorized, but have forbidden. In contract, an undisclosed principal may bind or may be bound to another, who did not know of his very existence at the time he made the contract. By a few words of ratification a man may make a trespass or a contract his own in which he had no part in fact. The possession of a tangible object may be attributed to him although he never saw it, and may be denied to another who has it under his actual custody or control. The existence of these rules is what makes agency a proper title in the law.

I do not mean to assume in advance that these rules have a common origin because they are clustered round the same subject. It would be possible to suggest separate reasons for each, and going farther still, to argue that each was no more than an application, even though a misapplication, of general principles.

Thus, in torts it is sometimes said that the liability of the master is “in effect for employing a careless servant,” repeating the reason offered by the pseudo-philosophy of the Roman jurists for an exceptional rule introduced by the prætor on grounds of public policy.1 This reason is shown to be unsound by the single fact that no amount of care in selection will exonerate the master;2 but still it might be argued that, whether right or wrong, this or some other notion of policy had led to the first of the rules which I selected as peculiar, and that at most the liability of a master for his servant’s torts is only a mistaken conclusion from the general theory of tort.

Then with regard to undisclosed principals in contract, it might be said that it was no hardship to hold a man bound who had commanded his servant to bind him. And as to the other and more difficult half of the doctrine, the right of an undisclosed principal to sue, it might be observed that it was first asserted in cases of debt,3 where the principal’s goods were the consideration of the liability, and that the notion thus started was afterwards extended to other cases of simple contract. Whether the objections to the analogy and to the whole rule were duly considered or not, it might be urged, there is no connection other than a purely dramatic one between the law of agency in torts and in contracts, or between the fact of agency and the rule, and here, as there, nothing more is to be found than a possibly wrong conclusion from the general postulates of the department of law concerned.

Ratification, again, as admitted by us, the argument would continue, merely shows that the Roman maxim “ratihabitio mandato comparatur” has become imbedded in our law, as it has been from the time of Bracton.

Finally, the theory of possession through servants would be accounted for by the servant’s admission of his master’s present right to deal with the thing at will, and the absence Edition: current; Page: [373] of any claim or intent to assert a claim on his part, coupled with the presence of such a claim on the part of the master.

But the foregoing reasoning is wholly inadequate to justify the various doctrines mentioned, as I have shown in part and as I shall prove in detail hereafter. And assuming the inadequacy to be proved, it cannot but strike one as strange that there should run through all branches of the law a tendency to err in the same direction. If, as soon as the relation of master and servant comes in, we find the limits of liability for, or gain by, others’ acts enlarged beyond the scope of the reasons offered or of any general theory, we not only have good ground for treating that relation separately, but we fairly may suspect that it is a cause as well as a concomitant of the observed effects.

Looking at the whole matter analytically it is easy to see that if the law did identify agents with principals, so far as that identification was carried the principal would have the burden and the benefit of his agent’s torts, contracts, or possession. So, framing a historical hypothesis, if the starting-point of the modern law is the patria potestas, a little study will show that the fiction of identity is the natural growth from such a germ.

There is an antecedent probability that the patria potestas has exerted an influence at least upon existing rules. I have endeavored to prove elsewhere that the unlimited liability of an owner for the torts of his slave grew out of what had been merely a privilege of buying him off from a surrender to the vengeance of the offended party, in both the early Roman and the early German law. I have shown, also, how the unlimited liability thus established was extended by the prætor in certain cases to the misconduct of free servants.1 Of course it is unlikely that the doctrines of our two parent systems should have been without effect upon their offspring, the common law.

The Roman law, it is true, developed no such universal doctrines of agency as have been worked out in England. Only innkeepers and shipowners (nautae, caupones, stabularii) were made answerable for the misconduct of their free Edition: current; Page: [374] servants by the prætor’s edict. It was not generally possible to acquire rights or to incur obligations through the acts of free persons.1 But, so far as rights of property, possession,2 or contract3 could be acquired through others not slaves, the law undoubtedly started from slavery and the patria potestas.

It will be easy to see how this tended toward a fictitious identification of agent with principal, although within the limits to which it confined agency the Roman law had little need and made little use of the fiction. Ulpian says that the act of the family cannot be called the act of the paterfamilias unless it is done by his wish.4 But as all the family rights and obligations were simply attributes of the persona of the family head, the summary expression for the members of the family as means of loss or gain would be that they sustained that persona, pro hac vice. For that purpose they were one with the paterfamilias. Justinian’s Institutes tell us that the right of a slave to receive a binding promise is derived ex persona domini.5 And with regard to free agents, the commentators said that in such instances two persons were feigned to be one.6

Such a formula, of course, is only derivative. The fiction is merely a convenient way of expressing rules which were arrived at on other grounds. The Roman prætor did not make innkeepers answerable for their servants because “the act of the servant was the act of the master,” any more than because they had been negligent in choosing them. He did so on substantive grounds of policy—because of the special confidence necessarily reposed in innkeepers. So when it was held that a slave’s possession was his owner’s possession, the practical fact of the master’s power was at the bottom of the decision.7

But when such a formula is adopted, it soon acquires an Edition: current; Page: [375] independent standing of its own. Instead of remaining only a short way of saying that when from policy the law makes a master responsible for his servant, or because of his power gives him the benefit of his slave’s possession or contract, it treats him to that extent as the tort-feasor, possessor, or contractee, the formula becomes a reason in itself for making the master answerable and for giving him rights. If “the act of the servant is the act of the master,” or master and servant are “considered as one person,” then the master must pay for the act if it is wrongful, and has the advantage of it if it is right. And the mere habit of using these phrases, where the master is bound or benefited by his servant’s act, makes it likely that other cases will be brought within the penumbra of the same thought on no more substantial ground than the way of thinking which the words have brought about.

I shall examine successively the English authorities with regard to agency in tort, contract, ratification, and possession. But some of those authorities are of equal importance to every branch of the proposed examination, and will prove in advance that the foregoing remarks are not merely hypothetical. I therefore begin with citations sufficient to establish that family headship was recognized as a factor in legal rights and duties; that this notion of headship was extended by analogy so as to cover the relation of a master to freemen filling a servile place for the time being, and that the relations thus embraced were generalized under the misleading fiction of identity.

The familia, Bracton says, embraces “those who are regarded in the light of serfs, such as, &c. So, too, as well freemen as serfs, and those over whom one has the power of command.”1

In West’s Symboleography,2 a work which was published towards the beginning of the reign of James I., and which, though mainly a form book, gives several glimpses of far-reaching insight, we read as follows:—

Here we see that the patria potestas is the substantive ground, that it is extended to cover free agents, who are not even domestic servants, and that it finds its normal expression in the fiction of identity.

So, at the beginning of the next reign, it was said that an action for hire, due to the negligence of a wife, or servant, lay “vers patrem familias.”1 The extension of the liability, as shown by West, is sometimes expressed in later books by saying that it is not confined to cases where the party stands in the relation of paterfamilias to the wrong-doer;2 but this only means that the rule extends to other servants besides domestic servants, and admits the analogy or starting-point.3

Every one is familiar with the fiction as applied to married women. The early law dealt with married women on the footing of servants. It called both wives and servants chattels.4 The wife was said to be in the nature of a servant,5 and husband and wife were only one person in law.6 So far was this identification carried, so far was the persona of the wife swallowed up in and made part of her husband’s, that whereas, in general, assigns could not vouch upon a warranty unless they were expressly mentioned in it,7 a husband could always vouch upon a warranty made to his wife before marriage. Edition: current; Page: [377] By marriage, as was said in Simon Simeon’s case “it vested in the person of the husband.” That is to say, although what actually happened was that the right to enforce a contract was transferred to a stranger, in theory of law there was no transfer, because the stranger had become the same person as the contractee.1

Of course the identification between husband and wife, although by no means absolute, was far more complete than that between master and menial servant, just as in the latter case it went farther than in that of an agent employed for some particular transaction. Even in the case of villeins, while the lord might take advantage of their possession or their title, he could not take advantage of contracts or warranties made to them.2 But the idea and its historical starting-point were the same throughout. When considering the later cases, the reader will remember that it is incontrovertibly established that a wife was on the footing of a servant, that the consequences of the relation were familiarly expressed in terms of the fiction of identity, and, therefore, that the applicability of this fiction to the domestic relations generally must have been well known to the courts long before the date of the principal decisions, which it will be my task to interpret.

I now take up the liability of a master for the torts of his servant at common law. This has been supposed in England to have been manufactured out of the whole cloth, and introduced by the decision in Michael v. Alestree3 in the reign of Charles II. In view of the historical antecedents it would be very extraordinary if such a notion was correct. I venture to think that it is mistaken, and that the principle has gradually grown to its present form from beginnings of the earliest date. I also doubt whether Michael v. Alestree is an example Edition: current; Page: [378] for the principle in question. It rather seems to me a case in which the damage complained of was the natural consequence of the very acts commanded by the master, and which, therefore, as I have said above, needs no special or peculiar doctrine to account for it. It was an action on the case against master and servant;

In other words, although there was no negligence averred in the mode of driving the horses at the instant of the accident, but, e contra, that the horses were ungovernable, which was the scope of the defendant’s objection, there was negligence in driving ungovernable horses for the purpose of breaking them in a public place, and that was averred, and was averred to have been done negligently. Furthermore, it was averred to have been done negligently by the defendant, which was a sufficient allegation on its face, and would be supported by proof that the defendant, knowing the character of the horses, ordered his servant to break them in a public resort. Indeed, the very character of the command (to break horses) imports sufficient knowledge; and when a command is given to do the specified act complained of, it always may be laid as the act of the party giving the order.2

When I come to investigate the true history of this part of the law, notwithstanding the likelihood which I have pointed out that it was a continuation and development of what I Edition: current; Page: [379] have traced in one or both of the parent systems, I must admit that I am met with a difficulty. Even in Bracton, who writes under the full influence of the Roman law, I have failed to find any passage which distinctly asserts the civil liability of masters for their servants’ torts, apart from command or ratification. There is one text, to be sure, which seems corrupt as it stands and which could be amended by conjecture so as to assert it. But as the best manuscripts in Lincoln’s Inn substantially confirm the printed reading, conjecture would be out of place.1

On the other hand, I do find an institution which may or may not have been connected with the Anglo-Saxon laws touching the responsibility of masters, but which, at any rate, equally connects liability of a different sort with family headship.

At about the time of the Conquest, what was known as the Frithborh, or frankpledge, was either introduced or grew greatly in importance. Among other things, the master was made the pledge of his servants, to hand them over to justice or to pay the fine himself. “Omnes qui servientes habent, eorum sint francplegii,” was the requirement of William’s laws. Bracton quotes the similar provisions of Edward the Confessor, and also says that in some counties a man is held to answer for the members of his family.2 This quasi-criminal liability of master for man is found as late as Edward II. alongside of the other rules of frankpledge, with which this discussion is not concerned. Fitzherbert’s Abridgment3 reads as follows: “Note that if the servant (serviens) of any lord while in his service (in servicio suo existens) commits a felony and is convicted, although after the felony (the master) has not received him, he is to be amerced, and the reason is because he received him ‘in bourgh.’ ” Bracton, in like manner, says that the master is bound “emendare” for certain torts of his servant,4 meaning, as I take it, to pay a fine, not damages.

But true examples of the peculiar law of master and servant are to be found before Edward II. The maxim respondeat superior has been applied to the torts of inferior officers from the time of Edward I. to the present day. Thus that chapter of the Statute of Westminster the Second,1 which regulates distresses by sheriffs or bailiffs, makes the officer disregarding its provisions answerable, and then continues, “si non habeat ballivus unde reddat reddat superior suus.” So a later chapter of the same statute, after subjecting keepers of jails to an action of debt for escapes in certain cases, provides that if the keeper is not able to pay, his superior, who committed the custody of the jail to him, shall be answerable by the same writ.2 So, again, the eighteenth chapter of the Articuli super Chartas3 gives a writ of waste to wards, for waste done in their lands in the king’s hands by escheators or sub-escheators, “against the escheator for his act, or the sub-escheator for his act (if he have whereof to answer), and if he have not, his master shall answer (‘si respoigne son sovereign’) by like pain concerning the damages, as is ordained by the statute for them that do waste in wardships.” A case of the time of Edward II. interpreting the above statute concerning jailers is given in Fitzherbert’s Abridgment,4 and later similar cases are referred to in Coke’s Fourth Institute.5

It may be objected that the foregoing cases are all statutory. But the same principle seems to have been applied, apart from any statute except that which gave counties the power to elect coroners, to make the county of Kent answerable to the king for a coroner’s default, as well as in other instances which will be mentioned later.6 Moreover, early Edition: current; Page: [381] statutes are as good evidence of prevailing legal conceptions as decisions are.

But again it may be objected that there were special grounds of public policy for requiring those who disposed of public offices of profit to appoint persons “for whom they will answer at their peril,” in the words of another similar statute as to clerks in the King’s Courts.1 It might be said with truth that the responsibility was greater than in the case of private servants, and it might be asked whether respondeat superior in its strict sense is not an independent principle which is rather to be deemed one of the causes of the modern law, than a branch from a common stem. It certainly has furnished us with one of the inadequate reasons which have been put forward for the law as it is,—that somebody must be held who is able to pay the damages.

The weight of the evidence seems to me to overcome these objections. I think it most probable that the liability for under-officers was a special application of conceptions drawn from the family and the power of the family head over his servants. Those conceptions were in existence, as I have shown. From a very early date, under-officers are called servants of their superior, as indeed it seems to be implied that they are, by the word “sovereign,” or even “superior,” in the statutes which have been cited. “Sovereign” is used as synonymous with master in Dyer.2 In the Y. B., 11 Edward IV. 1, pl. 1, it is said, “If I make a deputy, I am always officer, and he performs the office in my right and as my servant;” and from that day to this, not only has the same language been repeated,3 but, as I shall show, one of the chosen fields for the express use of the fiction of identity is the relation of superior and under-officer.

Under Edward III. it was held that if an abbot has a wardship, Edition: current; Page: [382] and a co-canon commits waste, the abbot shall be charged by it, “for that is adjudged the deed of the abbot.”1 This expression appears to me not only to apply the rule respondeat superior beyond the case of public officers, but to adopt the fiction of identity as a mode of explaining the rule.

An earlier record of the same reign, although it turned on the laws of Oleron, shows that the King’s Court would in some cases hold masters more strictly accountable for their servants’ torts than is even now the case. A shipmaster was held liable in trespass de bonis asportatis for goods wrongfully taken by the mariners, and it was said that he was answerable for all trespasses on board his ship.2

A nearly contemporaneous statute is worth mentioning, although it perhaps is to be construed as referring to the fines which have been mentioned above, or to other forfeitures, and not to civil damages. It reads, “That no merchant nor other, of what condition that he be, shall lose or forfeit his goods nor merchandizes for the trespass and forfeiture of his servant, unless he do it by the commandment or procurement of his master, or that he hath offended in the office in which his master hath set him, or in other manner, that the master be holden to answer for the deed of his servant by the law-merchant, as elsewhere is used.”3 The statute limits a previously existing liability, but leaves it open that the master still shall be holden to answer for the deed of his servant in certain cases, including those of the servant’s offending in the office in which the master hath set him. It is dealing with merchants, to be sure, but is another evidence that the whole modern law is of ancient extraction.

It must be remembered, however, that the cases in which the modern doctrines could have been applied in the time of the Year Books were exceedingly few. The torts dealt with by the early law were almost invariably wilful. They were either prompted by actual malevolence, or at least were committed Edition: current; Page: [383] with full foresight of the ensuing damage.1 And as the judges from an early day were familiar with the distinction between acts done by a man on his own behalf and those done in the capacity of servant,2 it is obvious that they could not have held masters generally answerable for such torts unless they were prepared to go much beyond the point at which their successors have stopped.3 Apart from frauds4 and intentional trespasses against the master’s will5 I only know of one other case in the Year Books which is important to this part of my subject. That, however, is very important. It is the case concerning fire,6 which was the precedent relied on by Lord Holt in deciding Turberville v. Stampe,7 which in its turn has been the starting-point of the later decisions on master and servant.8 I therefore shall state it at length.

The foregoing case affords some ground for the argument which was vainly pressed in Turberville v. Stampe, that the liability was confined to the house.2 Such a limit is not unsupported by analogy. By the old law a servant’s custody of his master’s things was said to be the master’s possession within his house, but the servant’s on a journey outside of it.3 So an innkeeper was liable for all goods within the inn, whether he had the custody of them or not.4 So in the case which has been mentioned above, a master was said to be responsible for the acts of his servants on board ship. It will be noticed also that the responsibility of a householder seems to be extended to his guests. From that day to this there have been occasional glimpses of a tendency to regard guests as part of the familia for the purposes of the law.5 And in view of the fact that by earlier law if a guest was allowed to stop in the house three days, he was called hoghenehine or agenhine, that is, own hine or servant of the host, it may be thought that we have here an Edition: current; Page: [385] echo of the frithborh.1 But with whatever limits and for whatever occult causes, the responsibility of the head of the house for his servants was clearly recognized, and, it would seem, the identification of the two, notwithstanding a statement by counsel, as clear as ever has been made since, of the objections to the doctrine.

The later cases in the Year Books are of wilful wrongs, as I have said, and I now pass to the subsequent reports. Under Elizabeth a defendant justified taking sheep for toll under a usage to have toll of strangers’ sheep driven through the vill by strangers, and if he were denied by such stranger driving them, to distrain them. The defendant alleged that the plaintiff, the owner of the sheep, was a stranger, but did not allege that the driver was. But the court sustained the plea, saying, “The driving of the servant is the driving of the master; and if he be a foreigner, that sufficeth.”2

I leave on one side certain cases which often have been cited for the proposition that a master is chargeable for his servant’s torts, because they may be explained otherwise and make no mention of it.3

The next evidence of the law to which I refer is the passage from West’s Symboleography which was given in full at the outset, and which gives the modern doctrine of agency as well as the fiction of identity in their full development. There are two nearly contemporaneous cases in which unsuccessful attempts were made to hold masters liable for wilful wrongs of their servants, in one for a piracy,1 in the other for a fraud.2 They are interesting chiefly as showing that the doctrine under discussion was in the air, but that its limits were not definitely fixed. The former sought to carry the rule respondeat superior to the full extent of the early statutes and cases which have been referred to, and cited the Roman law for its application to public affairs. The latter cites Doctor and Student. West also, it will have been noticed, indicates Roman influence.

Omitting one or two cases on the liability of the servant, which will be mentioned shortly, I come once more to a line of authorities touching public officers. I have said that although there was a difference in the degree of responsibility, under-officers always have been said to be servants.

Under Charles II. this difference was recognized, but it was laid down that “the high sheriff and under-sheriff is one officer,” and on that ground the sheriff was held chargeable.3 Lord Holt expressed the same thought: “What is done by the deputy is done by the principal, and it is the act of the principal,” or, as it is put in the margin of the report, “Act of deputy may forfeit office of principal, because it is quasi his act.”4 Later still, Blackstone repeats from the bench the language of Charles’s day. “There is a difference between master and servant, but a sheriff and all his officers are considered in cases like this as one person.” So his associate judge, Gould, “I consider [the Edition: current; Page: [387] under-sheriff’s clerk] as standing in the place of, and representing the very persons of . . . the sheriffs themselves.”1 Again, the same idea is stated by Lord Mansfield: “For all civil purposes the act of the sheriff’s bailiff is the act of the sheriff.”2 The distinction taken above by Blackstone did not prevent his saying in his Commentaries that underofficers are servants of the sheriff;3 and in Woodgate v. Knatchbull,4 Ashurst, J., after citing the words of Lord Mansfield, adds, “This holds, indeed, in most instances with regard to servants in general;” and Blackstone says the same thing in a passage to be quoted hereafter.

Having thus followed down the fiction of identity with regard to one class of servants, I must now return once more to Lord Holt’s time. In Boson v. Sandford,5 Eyres, J., says that the master of a ship is no more than a servant, “the power which he hath is by the civil law, Hob. 111, and it is plain the act or default of the servant shall charge the owner.” Again, in Turberville v. Stampe,6 Lord Holt, after beginning according to the Roman law that “if my servant throws dirt into the highway I am indictable,” continues, “So in this case, if the defendant’s servant kindled the fire in the way of husbandry and proper for his employment, though he had no express command of his master, yet the master shall be liable to an action for damages done to another by the fire; for it shall be intended, that the servant had authority from his master, it being for his master’s benefit.” This is the first of a series of cases decided by Lord Holt7 which are the usual starting-point of modern decisions, and it will be found to be the chief authority relied on by cases which have become leading in their turn.8 It therefore Edition: current; Page: [388] is interesting to note that it only applied the principles of Beaulieu v. Finglam, in the Year Book 2 Henry IV., to a fire outside the house, that the illustration taken from the Roman law shows that Lord Holt was thinking of the responsibility of a paterfamilias, and that in another case within three years1 he made use of the fiction of identity.

I may add, by way of confirmation, that Blackstone, in his Commentaries, after comparing the liability of the master who “hath the superintendence and charge of all his household” if any of his family cast anything out of his house into the street, with that of the Roman paterfamilias,2 further observes that the “master may frequently be answerable for his servant’s misbehavior, but never can shelter himself from punishment by laying the blame on his agent. The reason of this is still uniform and the same; that the wrong done by the servant is looked upon in law as the wrong of the master himself.”3

There is another line of cases which affords striking and independent evidence that the law of master and servant is a survival from slavery or other institution of like effect for the present purpose, and that the identification of the two parties was carried out in some cases to its logical result. If a servant, although a freeman, was treated for the purposes of the relation as if he were a slave who only sustained the persona of his master, it followed that when the master was liable, the servant was not. There seems to have been a willingness at one time to accept the conclusion. It was said under James and Charles I. that the sheriff only was liable if an under-sheriff made a false return, “for the law doth not take notice of him.”4 So it was held in the latter reign that case does not lie against husband and wife for negligently keeping their fire in their house, “because this action lies on the . . . custom . . . against patrem familias and not against a servant or a feme covert who is in the Edition: current; Page: [389] nature of a servant.1 So Rolle says that “if the servant of an innkeeper sells wine which is corrupt, knowing this, action of deceit lies not against the servant, for he did this only as servant.”2 So as to an attorney maliciously acting in a case where he knew there was no cause of action. “For that what he does is only as servant to another, and in the way of his calling and profession.”3

Later this was cut down by Lord Holt to this rule that a servant is not liable for a neglect (i. e., a nonfeasance), “for they must consider him only as a servant;” “but for a misfeasance an action will lie against a servant or deputy, but not quatenus a deputy or servant, but as a wrong-doer.”4 That is to say, although it is contrary to theory to allow a servant to be sued for conduct in his capacity as such, he cannot rid himself of his responsibility as a freeman, and may be sued as a free wrong-doer. This, of course, is the law to-day.5 Yet as late as Blackstone’s Commentaries it was said that “if a smith’s servant lames a horse while he is shoeing him, an action lies against the master, and not against the servant.6

I think I now have traced sufficiently the history of agency in torts. The evidence satisfies me that the common law has started from the patria potestas and the frithborh,—whether following or simply helped by the Roman law, it does not matter,—and that it has worked itself out to its limits through the formula of identity. It is true that liability for another as master or principal is not confined to family relations; but I have shown partly, and shall complete the proof later, that the whole doctrine has been worked Edition: current; Page: [390] out in terms of master and servant and on the analogies which those terms suggested.

The history of agency as applied to contract is next to be dealt with. In this branch of the law there is less of anomaly and a smaller field in which to look for traces of fiction than the last. A man is not bound by his servant’s contracts unless they are made on his behalf and by his authority, and that he should be bound then is plain common-sense. It is true that in determining how far authority extends, the question is of ostensible authority and not of secret order. But this merely illustrates the general rule which governs a man’s responsibility for his acts throughout the law. If, under the circumstances known to him, the obvious consequence of the principal’s own conduct in employing the agent is that the public understand him to have given the agent certain powers, he gives the agent those powers. And he gives them just as truly when he forbids their exercise as when he commands it. It seems always to have been recognized that an agent’s ostensible powers were his real powers;1 and on the other hand it always has been the law that an agent could not bind his principal beyond the powers actually given in the sense above explained.

There is, however, one anomaly introduced by agency even into the sphere of contract,—the rule that an undisclosed principal may sue or be sued on a contract made by an agent on his behalf; and this must be examined, although the evidence is painfully meagre. The rule would seem to follow very easily from the identification of agent and principal, as I shall show more fully in a moment. It is therefore well to observe at the outset that the power of contracting through others, natural as it seems, started from the family relations, and that it has been expressed in the familiar language of identification.

Generally speaking, by the Roman law contractual rights could not be acquired through free persons who were strangers to the family. But a slave derived a standing to Edition: current; Page: [391] accept a promise to his master ex persona domini.1 Bracton says that contracts can be accepted for a principal by his agent; but he starts from the domestic relations in language very like that of the Roman juris consults. An obligation may be acquired through slaves or free agents in our power, if they take the contract in the name of their master.2

It was said under Henry V. that a lease made by the seneschal of a prior should be averred as the lease of the prior,3 and under James I. it was held that an assumpsit to a servant for his master was properly laid as an assumpsit to the master.4 West’s Symboleography belongs to the beginning of the same reign. It will be remembered that the language which has been quoted from that work applies to contracts as well as to torts. A discussion in the Year Book, 8 Edward IV., fol. 11, is thus abridged in Popham: “My servant makes a contract, or buys goods to my use; I am liable, and it is my act.”5 Baron Parke explains the requirement that a deed executed by an agent should be executed in the name of his principal, in language repeated from Lord Coke: “The attorney is . . . put in place of the principal and represents his person.”6 Finally, Chitty, still speaking of contracts, says, like West, that “In point of law the master and servant, or principal and agent, are considered as one and the same person.”7

I have found no early cases turning upon the law of undisclosed principal. It will be remembered that the only action on simple contract before Henry VI., and the chief Edition: current; Page: [392] one for a good while after, was debt, and that this was founded on a quid pro quo received by the debtor. Naturally, therefore, the chief question of which we hear in the earlier books is whether the goods came to the use of the alleged debtor.1 It is at a much later date, though still in the action of debt, that we find the most extraordinary half of the rule under consideration first expressly recognized. In Scrimshire v. Alderton2 (H. 16 G. II.) a suit was brought by an undisclosed principal against a purchaser from a del credere factor. Chief Justice Lee “was of opinion that this new method [i. e., of the factor taking the risk of the debt for a larger commission] had not deprived the farmer of his remedy against the buyer.” And he was only prevented from carrying out his opinion by the obstinacy of the jury at Guildhall. The language quoted implies that the rule was then well known, and this, coupled with the indications to be found elsewhere, will perhaps warrant the belief that it was known to Lord Holt.

Scott v. Surman,3 decided at the same term that Scrimshire v. Alderton was tried, refers to a case of T. 9 Anne, Gurratt v. Cullum,4 in which goods were sold by factors to J. S. without disclosing their principal. The factors afterwards went into bankruptcy. Their assignee collected the debt, and the principal then sued him for the money. “And this matter being referred by Holt for the opinion of the King’s Bench, judgment was given on argument for the plaintiff. Afterwards at Guildhall, before Lord Chief Justice Parker, this case was cited and allowed to be law, because though it was agreed that payment by J. S. to [the factors] with whom the contract was made would be a discharge to J. S. against the principal, yet the debt was not in law due to them, but to the person whose goods they were . . . and being paid to the defendant who had no right to have it, it must be considered in law as paid for the use Edition: current; Page: [393] of him to whom it was due.” This explanation seems to show that Chief Justice Parker understood the law in the same way as Chief Justice Lee, and, if it be the true one, would show that Lord Holt did also. I think the inference is somewhat strengthened by other cases from the Salkeld MSS. cited in Buller’s Nisi Prius.1 Indeed I very readily should believe that at a much earlier date, if one man’s goods had come to another man’s hands by purchase, the purchaser might have been charged, although he was unknown and had dealt through a servant,2 and that perhaps he might have been, in the converse case of the goods belonging to an undisclosed master.3

The foregoing cases tend to show, what is quite probable, that the doctrine under discussion began with debt. I do not wish to undervalue the argument that may be drawn from this fact, that the law of undisclosed principal has no profounder origin than the thought that the defendant, having acquired the plaintiff’s goods by way of purchase, fairly might be held to pay for them in an action of contract, and that the rule then laid down has been extended since to other contracts.4

But suppose what I have suggested be true, it does not dispose of the difficulties. If a man buys B.’s goods of A., thinking A. to be the owner, and B. then sues him for the price, the defendant fairly may object that the only contract which he has either consented or purported to make is a contract with A., and that a stranger, to both the intent and the form of a voluntary obligation cannot sue upon it. If the contract was made with the owner’s consent, let the contractee bring his action. If it was made without actual Edition: current; Page: [394] or ostensible authority, the owner’s rights can be asserted in an action of tort. The general rule in case of a tortious sale is that the owner cannot waive the tort and sue in assumpsit.1 Why should the fact that the seller was secretly acting in the owner’s behalf enlarge the owner’s rights as against a third person? The extraordinary character of the doctrine is still clearer when it is held that under a contract purporting to be made with the plaintiff and another jointly, the plaintiff may show that the two ostensible joint parties were agents for himself alone, and thus set up a several right in the teeth of words used and of the ostensible transaction, which gave him only a joint one.2

Now, if we apply the formula of identification and say that the agent represents the person of the owner, or that the principal adopts the agent’s name for the purposes of that contract, we have at once a formal justification of the result. I have shown that the power of contracting through agents started from the family, and that principal and agent were identified in contract as well as in tort. I think, therefore, that the suggested explanation has every probability in its favor. So far as Lord Holt is concerned, I may add that in Gurratt v. Cullum the agent was a factor, that a factor in those days always was spoken of as a servant, and that Lord Holt was familiar with the identification of servant and master. If he was the father of the present doctrine, it is fair to infer that the technical difficulty was consciously or unconsciously removed from his mind by the technical fiction. And the older we imagine the doctrine to be, the stronger does a similar inference become. For just in proportion as we approach the archaic stage of the law, the greater do we find the technical obstacles in the way of any one attempting to enforce a contract except the actual party to it, and the greater therefore must have been the need of a fiction to overcome them.3

The question which I have been considering arises in another form with regard to the admission of oral evidence in favor of or to charge a principal, when a contract has been made in writing, which purports on its face to be made with or by the alleged agent in person. Certainly the argument is strong that such evidence varies the writing, and if the Statute of Frauds applies, that the statute is not satisfied unless the name of the principal appears. Yet the contrary has been decided. The step was taken almost sub silentio.1 But when at last a reason was offered, it turned on, or at least was suggested by, the notion of the identity of the parties. It was in substance that the principal “is taken to have adopted the name of the [agent] as his own, for the purpose of such contracts,” as it was stated by Smith in his Leading Cases, paraphrasing the language of Lord Denman in Trueman v. Loder.2

I gave some evidence at the beginning of this discussion, that notions drawn from the familia were applied to free servants, and that they were extended beyond the domestic relations. All that I have quoted since tends in the same direction. For when such notions are applied to freemen in a merely contractual state of service it is not to be expected that their influence should be confined to limits which became meaningless when servants ceased to be slaves. The passage quoted from Bracton proved that already in his day the analogies of domestic service were applied to relations of more limited subjection. I have now only to complete the proof that agency in the narrower sense, the law familiar to the higher and more important representatives employed in modern business, is simply a branch of the law of master and servant.

First of the attorney. The primitive lawsuit was conducted by the parties in person. Counsel, if they may be Edition: current; Page: [396] called so, were very early admitted to conduct the formal pleadings in the presence of the party, who was thus enabled to avoid the loss of his suit, which would have followed a slip on his own part in uttering the formal words, by disavowing the pleading of his advocate. But the Frankish law very slowly admitted the possibility of giving over the conduct of a suit to another, or of its proceeding in the absence of the principals concerned. Brunner has traced the history of the innovation by which the appointment of an attorney (i. e., loco positus) came generally to be permitted, with his usual ability.1 It was brought to England with the rest of the Norman law, was known already to Glanvill, and gradually grew to its present proportions. The question which I have to consider, however, is not the story of its introduction, but the substantive conception under which it fell when it was introduced.

If you were thinking of the matter a priori it would seem that no reference to history was necessary, at least to explain the client’s being bound in the cause by his attorney’s acts. The case presents itself like that of an agent authorized to make a contract in such terms as he may think advisable. But as I have hinted, whatever common-sense would now say, even in the latter case it is probable that the power of contracting through others was arrived at in actual fact by extending the analogy of slaves to freemen. And it is at least equally clear that the law had need of some analogy or fiction in order to admit a representation in lawsuits. I have given an illustration from Iceland in my book on the Common Law. There the contract of a suit was transferred from Thorgeir to Mord “as if he were the next of kin.”2 In the Roman law it is well known that the same difficulty was experienced. The English law agreed with the Northern sources in treating attorneys as sustaining the persona of their principal. The result may have been worked out in a different way, but that fundamental thought they had in Edition: current; Page: [397] common. I do not inquire into the recondite causes, but simply observe the fact.

Bracton says that the attorney represents the persona of his principal in nearly everything.1 He was “put in the place of” his principal, loco positus (according to the literal meaning of the word attorney), as every other case in the Abbreviatio Placitorum shows. The essoign de malo lecti had reference to the illness of the attorney as a matter of necessity.2 But, in general, the attorney was dealt with on the footing of a servant, and he is called so as soon as his position is formulated. Such is the language of the passage in West’s Symboleography which I have quoted above, and the anonymous case which held an attorney not liable for maliciously acting in a cause which he knew to be unfounded.3 When, therefore, it is said that the “act of the attorney is the act of his client,” it is simply that familiar fiction concerning servants applied in a new field. On this ground it was held that the client was answerable in trespass, for assault and false imprisonment, where his attorney had caused the party to be arrested on a void writ, wholly irrespective, it would seem, of any actual command or knowledge on the part of the client;4 and in trespass quare clausum, for an officer’s breaking and entering a man’s house and taking his goods by command of an attorney’s agent without the actual knowledge either of the client or the attorney. The court said that the client was “answerable for the act of his attorney, and that [the attorney] and his agent [were] to be considered as one person.”5

The only other agent of the higher class that I think it necessary to mention is the factor. I have shown elsewhere that he is always called a servant in the old books.6 West’s language includes factors as well as attorneys. Servant, Edition: current; Page: [398] factor, and attorney are mentioned in one breath and on a common footing in the Year Book, 8 Edward IV., folio 11 b. So Dyer,1 “if a purveyor, factor, or servant make a contract for his sovereign or master.” So in trover for money against the plaintiff’s “servant and factor.”2 It is curious that in one of the first attempts to make a man liable for the fraud of another, the fraudulent party was a factor. The case was argued in terms of master and servant.3 The first authority for holding a master answerable for his servant’s fraud is another case of a factor.4 Nothing is said of master and servant in the short note in Salkeld. But in view of the argument in Southern v. How, just referred to, which must have been before Lord Holt’s mind, and the invariable language of the earlier books, including Lord Holt’s own when arguing Morse v. Slue (“Factor, who is servant at the master’s dispose”),5 it is safe to assume that he considered the case to be one of master and servant, and it always is cited as such.6

To conclude this part of the discussion, I repeat from my book on the Common Law,7 that as late as Blackstone agents appear under the general head of servants; that the precedents for the law of agency are cases of master and servant, when the converse is not the case; and that Blackstone’s language on this point is express: “There is yet a fourth species of servants, if they may be so called, being rather in a superior, a ministerial, capacity; such as stewards, factors, and bailiffs; whom, however, the law considers as servants pro tempore, with regard to such of their acts as affect their master’s or employer’s property.”8

Possession is the third branch of the law in which the peculiar doctrines of agency are to be discovered, and to that I now pass.

The Roman law held that the possession of a slave was the possession of his master, on the practical ground of the master’s power.1 At first it confined possession through others pretty closely to things in custody of persons under the patria potestas of the possessor (including prisoners bona fide held as slaves). Later the right was extended by a constitution of Severus.2 The common law in like manner allowed lords to appropriate lands and chattels purchased by their villeins, and after they had manifested their will to do so, the occupation of the villeins was taken to be the right of their lords.3 As at Rome, the analogies of the familia were extended to free agents. Bracton allows possession through free agents, but the possession must be held in the name of the principal;4 and from that day to this it always has been the law that the custody of the servant is the possession of the master.5

The disappearance of the servant under the persona of his master, of which a trace was discovered in the law of torts, in this instance has remained complete. Servants have no possession of property in their custody as such.6 The distinction in this regard between servants and all bailees whatsoever7 is fundamental, although it often has been lost sight of. Hence a servant can commit larceny8 and cannot maintain trover.9 A bailee cannot commit larceny10 and can maintain trover.11 In an indictment for larceny against a Edition: current; Page: [400] third person the property cannot be laid in a servant,1 it may be laid in a bailee.2 A servant cannot assert a lien;3 a bailee, of course, may, even to the exclusion of the owner’s right to the possessory actions.4

Here, then, is another case in which effects have survived their causes. But for survival and the fiction of identity it would be hard to explain why in this case alone the actual custody of one man should be deemed by the law to be the possession of another and not of himself.

A word should be added to avoid a misapprehension of which there are signs in the books, and to which I have adverted elsewhere.5 A man may be a servant for some other purpose, and yet not a servant in his possession. Thus, an auctioneer or a factor is a servant for purposes of sale, but not for purposes of custody. His possession is not that of his principal, but, on the contrary, is adverse to it, and held in his own name, as is shown by his lien. On the other hand, if the fiction of identity is adhered to, there is nothing to hinder a man from constituting another his agent for the sole purpose of maintaining his possession, with the same effect as if the agent were a domestic servant, and in that case the principal would have possession and the agent would not.

Agency is comparatively unimportant in its bearing on possession, for reasons connected with procedure. With regard to chattels, because a present right of possession is held enough to maintain the possessory actions, and therefore a bailor, upon a bailment terminable at his will, has the same remedies as a master, although he is not one. With regard to real estate, because the royal remedies, the assizes, were confined to those who had a feudal seisin, and the party who had the seisin could recover as well when his lands were subject to a term of years as when they were in charge of agents or servants.6

Ratification is the only doctrine of which the history remains to be examined. With regard to this I desire to express myself with great caution, as I shall not attempt to analyze exhaustively the Roman sources from which it was derived. I doubt, however, whether the Romans would have gone the length of the modern English law, which seems to have grown to its present extent on English soil.

Ulpian said that a previous command to dispossess another would make the act mine, and, although opinion was divided on the subject, he thought that ratification would have the same effect. He agreed with the latitudinarian doctrine of the Sabinians, who compared ratification to a previous command.1 The Sabinians’ “comparison” of ratification to mandate may have been a mere figure of speech to explain the natural conclusion that if one accepts possession of a thing which has been acquired for him by wrongful force, he is answerable for the property in the same way as if he had taken it himself. It therefore is hardly worth while to inquire whether the glossators were right in their comment upon this passage, that the taking must have been in the name of the assumed principal,—a condition which is ambiguously mentioned elsewhere in the Digest.2

Bracton copied Ulpian,3 still, so far as I have observed, not going beyond cases of distress4 and disseisin.5 The first reported cases known to me are again assizes of novel disseisin.6

But later decisions went much beyond this point, as may be illustrated by one of them.7 In trespass de bonis asportatis the defendant justified as bailiff. After charging the inquest Gascoigne said that “if the defendant took the chattels claiming property in himself for a heriot, although the lord Edition: current; Page: [402] afterward agreed to that taking for services due him, still he [the defendant] cannot be called his bailiff for that time. But had he taken them without command, for services due the lord, and had the lord afterwards agreed to his taking, he shall be adjudged as bailiff, although he was nowhere his bailiff before that taking.” A ratification, according to this, may render lawful ab initio an act which without the necessary authority is a good cause of action, and for which the authority was wanting at the time that it was done. Such is still the law of England.1 The same principle is applied in a less startling manner to contract, with the effect of giving rights under them to persons who had none at the moment when the contract purported to be complete.2 In the case of a tort it follows, of course, from what has been said that if it is not justified by the ratification, the principal in whose name and for whose benefit it was done is answerable for it.3

Now it may be argued very plausibly that the modern decisions have only enlarged the comparison of the Sabinians into a rule of law, and carried it to its logical consequences. The comparatur of Ulpian has become the aequiparatur of Lord Coke,4 it might be said; ratification has been made equivalent to command, and that is all. But it will be seen Edition: current; Page: [403] that this is a very great step. It is a long way from holding a man liable as a wrongful disseizor when he has accepted the wrongfully-obtained possession, to allowing him to make justifiable an act which was without justification when it was done, and, if that is material, which was followed by no possession on the part of the alleged principal.1 For such a purpose why should ratification be equivalent to a previous command? Why should my saying that I adopt or approve of a trespass in any form of words make me responsible for a past act? The act was not mine, and I cannot make it so. Neither can it be undone or in any wise affected by what I may say.2

But if the act was done by one who affected to personate me, new considerations come in. If a man assumes the status of my servant pro hac vice, it lies between him and me whether he shall have it or not. And if that status is fixed upon him by my subsequent assent, it seems to bear with it the usual consequence as incident that his acts within the scope of his employment are my acts. Such juggling with words of course does not remove the substantive objections to the doctrine under consideration, but it does formally reconcile it with the general framework of legal ideas.

From this point of view it becomes important to notice that, however it may have been in the Roman law, from the time of the glossators and of the canon law it always has been required that the act should have been done in the name or as agent of the person assuming to ratify it. “Ratum quis habere non potest quod ipsius nomine non est gestum.”3 In the language of Baron Parke in Buron v. Denman,4 “a subsequent ratification of an act done as agent is equal to a prior authority.” And all the cases from that before Gascoigne Edition: current; Page: [404] downwards have asserted the same limitation.1 I think we may well doubt whether ratification would ever have been held equivalent to command in the only cases in which that fiction is of the least importance had it not been for the further circumstance that the actor had assumed the position of a servant for the time being. The grounds for the doubt become stronger if it be true that the liability even for commanded acts started from the case of owner and slave.

In any event, ratification like the rest of the law of agency reposes on a fiction, and whether the same fiction or another, it will be interesting in the conclusion to study the limits which have been set to its workings by practical experience.

What more I have to say concerning the history of agency will appear in my treatment of the last proposition which I undertook to maintain. I said that finally I should endeavor to show that the whole outline of the law, as it stands to-day, is the resultant of a conflict between logic and good sense—the one striving to carry fictions out to consistent results, the other restraining and at last overcoming that effort when the results become too manifestly unjust. To that task I now address myself.

I assume that common-sense is opposed to making one man pay for another man’s wrong, unless he actually has brought the wrong to pass according to the ordinary canons of legal responsibility,—unless, that is to say, he has induced the immediate wrong-doer to do acts of which the wrong, or, at least, wrong, was the natural consequence under the circumstances known to the defendant. I assume that common-sense is opposed to allowing a stranger to my overt acts and to my intentions, a man of whom I have never heard, to set up a contract against me which I had supposed I was making with my personal friend. I assume that common-sense is opposed to the denial of possession to a servant and the assertion of it for a depositary, when the only difference between the two lies in the name by which the custodian is called. And I assume that the opposition of common-sense is intensified Edition: current; Page: [405] when the foregoing doctrines are complicated by the additional absurdities introduced by ratification. I therefore assume that common sense is opposed to the fundamental theory of agency, although I have no doubt that the possible explanations of its various rules which I suggested at the beginning of this Essay, together with the fact that the most flagrant of them now-a-days often presents itself as a seemingly wholesome check on the indifference and negligence of great corporations, have done much to reconcile men’s minds to that theory. What remains to be said I believe will justify my assumption.

I begin with the constitution of the relation of master and servant, and with the distinction that an employer is not liable for the torts of an independent contractor, or, in other words, that an independent contractor is not a servant. And here I hardly know whether to say that common-sense and tradition are in conflict, or that they are for once harmonious. On the one side it may be urged that when you have admitted that an agency may exist outside the family relations, the question arises where you are to stop, and why, if a man who is working for another in one case is called his servant, he should not be called so in all. And it might be said that the only limit is found, not in theory, but in common-sense, which steps in and declares that if the employment is well recognized as very distinct, and all the circumstances are such as to show that it would be mere folly to pretend that the employer could exercise control in any practical sense, then the fiction is at an end. An evidence of the want of any more profound or logical reason might be sought in the different circumstances that have been laid hold of as tests, the objections that might be found to each, and in the fact that doubtful cases are now left to the jury.1

On the other hand, it might be said that the master is made answerable for the consequences of the negligent acts “of those whom the law denominates his servants, because,” in the language of that judgment which settled the distinction under consideration,1 “such servants represent the master himself, and their acts stand upon the same footing as his own.” That although the limits of this identification are necessarily more or less vague, yet all the proposed tests go to show that the distinction rests on the remoteness of personal connection between the parties, and that as the connection grows slighter, the likeness to the original case of menials grows less. That a contractor acts in his own name and on his own behalf, and that although the precise point at which the line is drawn may be somewhat arbitrary, the same is true of all legal distinctions, and that they are none the worse for it, and that wherever the line is drawn it is a necessary one, and required by the very definition of agency. I suppose this is the prevailing opinion.

I come next to the limit of liability when the relation of master and servant is admitted to exist. The theory of agency as applied to free servants no doubt requires that if the servant commits a wilful trespass or any other wrong, when employed about his own business, the master should not be liable. No free man is servant all the time. But the cases which exonerate the master could never have been decided as Edition: current; Page: [407] the result of that theory alone. They rather represent the revolt of common-sense from the whole doctrine when its application is pushed far enough to become noticeable.

For example, it has been held that it was beyond the scope of a servant’s employment to go to the further side of a boundary ditch, upon a neighbor’s land, and to cut bushes there for the purpose of clearing out the ditch, although the right management of the master’s farm required that the ditch should be cleaned, and although the servant only did what he thought necessary to that end, and although the master relied wholly upon his servant’s judgment in the entire management of the premises.1

Mr. Justice Keating said, the powers given to the servant “were no doubt very wide, but I do not see how they could authorize a wrongful act on another person’s land or render his employers liable for a wilful act of trespass.” It is true that the act could not be authorized in the sense of being made lawful, but the same is true of every wrongful act for which the principal is held. As to the act being wilful, there was no evidence that it was so in any other sense than that in which every trespass might be said to be, and as the judge below directed a verdict for the defendant, there were no presumptions adverse to the plaintiff in the case. Moreover, it has been said elsewhere that even a wilful act in furtherance of the master’s business might charge him.2

Mr. Justice Grove attempted to draw the line in another way. He said, “There are some things which may be so naturally expected to occur from the wrongful or negligent conduct of persons engaged in carrying out an authority given, that they may be fairly said to be within the scope of the employment.” But the theory of agency would require the same liability for both those things which might and those which might not be so naturally expected, and this is only revolt from the theory. Moreover, it may be doubted whether a case could be found where the servant’s conduct Edition: current; Page: [408] was more naturally to be expected for the purpose of accomplishing what he had to do.1

The truth is, as pretty clearly appears from the opinions of the judges, that they felt the difficulty of giving a rational explanation of the doctrine sought to be applied, and were not inclined to extend it. The line between right and wrong corresponded with the neighbor’s boundary line, and therefore was more easily distinguishable than where it depends on the difference between care and negligence, and it was just so much easier to hold that the scope of the servant’s employment was limited to lawful acts.

I now pass to fraud. It first must be understood that, whatever the law may be, it is the same in the case of agents, stricto sensu, as of other servants. As has been mentioned, the fraudulent servant was a factor in the first reported decision that the master was liable.2 Now if the defrauded party not merely has a right to repudiate a contract fraudulently obtained, or in general to charge a defendant to the extent that he has derived a benefit from another’s fraud, but may hold him answerable in solidum for the damage caused by the fraudulent acts of his servant in the course of the latter’s employment, the ground can only be the fiction that the act of the servant is the act of the master.

It is true that in the House of Lords3 Lord Selborne said that the English cases “proceeded, not on the ground of any imputation of vicarious fraud to the principal, but because (as it was well put by Mr. Justice Willes in Barwick’s case4) “with respect to the question whether a principal is answerable for the act of his agent in the course of his master’s business, no sensible distinction can be drawn between the case of fraud and the case of any other wrong.” But this only puts off the evil day. Why is the principal answerable in the case of any other wrong? It is, as has been seen, because, in the language of Mr. Justice Littledale, the “servants represent the master himself, and their acts stand upon the Edition: current; Page: [409] same footing as his own.”1 Indeed Mr. Justice Willes, in the very judgment cited by Lord Selborne, refers to Mr. Justice Littledale’s judgment for the general principle. So Lord Denman, in Fuller v. Wilson,2 “We think the principal and his agent are for this purpose completely identified.” I repeat more distinctly the admission that no fiction is necessary to account for the rule that one who is induced to contract by an agent’s fraud may rescind as against the innocent principal. For whether the fraud be imputed to the principal or not, he has only a right to such a contract as has been made, and that contract is a voidable one. But when you go beyond that limit and even outside the domain of contract altogether to make a man answer for any damages caused by his agent’s fraud, the law becomes almost inconceivable without the aid of the fiction. But a fiction is not a satisfactory reason for changing men’s rights or liabilities, and common-sense has more or less revolted at this point again and has denied the liability. The English cases are collected in Houldsworth v. City of Glasgow Bank.3

When it was attempted to carry identification one step further still, and to unite the knowledge of the principal with the statement of the agent in order to make the latter’s act fraudulent, as in Cornfoot v. Fowke,4 the absurdity became more manifest and dissent more outspoken. As was most accurately said by Baron Wilde in a later case,5 “The artificial identification of the agent and principal, by bringing the words of the one side by side with the knowledge of the other, induced the apparent logical consequence of fraud. On the other hand, the real innocence of both agent and principal repelled the notion of a constructive fraud in either. A discordance of views, varying with the point from which the subject was looked at, was to be expected.” The language Edition: current; Page: [410] of Lord Denman, just quoted, from Fuller v. Wilson, was used with reference to this subject.

The restrictions which common-sense has imposed on the doctrine of undisclosed principal are well known. An undisclosed principal may sue on his agent’s contract, but his recovery is subject to the state of accounts between the agent and third person.1 He may be sued, but it is held that the recovery will be subject to the state of accounts between principal and agent, if the principal has paid fairly before the agency was discovered; but it is, perhaps, doubtful whether this rule or the qualification of it is as wise as the former one.2

Then as to ratification. It has nothing to do with estoppel,3 but the desire to reduce the law to general principles has led some courts to cut it down to that point.4 Again, the right to ratify has been limited by considerations of justice to the other party. It has been said that the ratification must take place at a time and under circumstances when the would-be principal could have done the act;5 and it has been so held in some cases when it was manifestly just that the other party should know whether the act was to be considered the principal’s or not, as in the case of an unauthorized notice to quit, which the landlord attempts to ratify after the time of the notice has begun to run.6 But it is held that bringing an action may be subsequently ratified.7

I now take up pleading. It is settled that an assumpsit8 to or by a servant for his master may be laid as an assumpsit to or by the master. But these are cases where the master has commanded the act, and, therefore, as I showed in the beginning of this discussion, may be laid on one side. The Edition: current; Page: [411] same thing is true of a trespass commanded by the master.1 But when we come to conduct which the master has not commanded, but for which he is responsible, the difficulty becomes greater. It is, nevertheless, settled that in actions on the case the negligence of the servant is properly laid as the negligence of the master,2 and if the analogy of the substantive law is to be followed, and the fiction of identity is to be carried out to its logical results, the same would be true of all pleading. It is so held with regard to fraud. “The same rule of law which imputes to the principal the fraud of the agent and makes him answerable for the consequences justifies the allegation that the principal himself committed the wrong.”3 Some American cases have applied the same view to trespass,4 and have held that this action could be maintained against a master whose servant had committed a trespass for which he was liable although he had not commanded it. But these decisions, although perfectly reasonable, seem to have been due rather to inadvertence than to logic, in the first instance, and the current of authority is the other way. Baron Parke says, “The maxim ‘Qui facit per alium, facit per se’ renders the master liable for all the negligent acts of the servant in the course of his employment, but that liability does not make the direct act of the servant the direct act of master. Trespass will not lie against him; case will, in effect, for employing a careless servant.”5 Considered as reasoning, it would be hard to unite more errors in as many words. “Qui facit per alium, facit per se” as an axiom admitted by common-sense goes no farther than to make a man liable for commanded trespasses, and for them trespass lies. If it be extended beyond that point it simply embodies the fiction, and the precise point of the fiction is that the direct act of one is treated as if it were the direct act of another. To avoid this conclusion a false reason is given for the Edition: current; Page: [412] liability in general.1 It is, as has been shown, the old fallacy of the Roman jurists, and is disposed of by the decisions that no amount of care in the choice of one’s servant will help the master in a suit against him.2 But although the reasoning is bad, the language expresses the natural unwillingness of sensible men to sanction an allegation that the defendant directly brought force to bear on the plaintiff, as the proper and formal allegation, when as a matter of fact it was another person who did it by his independent act, and the defendant is only answerable because of a previous contract between himself and the actual wrong-doer.3 Another circumstance may have helped. Usually the master is not liable for his servant’s wilful trespasses, and, therefore, the actions against him stand on the servant’s negligence as the alternative ground on which anybody is responsible. There was for a time a confused idea that when the cause of action was the defendant’s negligence, the proper form of action was always case.4 Of course if this was true it applied equally to the imputed negligence of a servant. And thus there was the farther possibility of confounding the question of the proper form of action with the perfectly distinct one whether the defendant was liable at all.

I come finally to the question of damages. In those States where exemplary damages are allowed, the attempt naturally has been made to recover such damages from masters when their servants’ conduct has been such as to bring the doctrine into play. Some courts have had the courage to be consistent.5 “What is the principle,” it is asked, “upon which this rule of damages is founded? It is that the act of the agent is the act of the principal himself. . . . The law has established, to this extent, their legal unity and identity. Edition: current; Page: [413] . . . This legal unity of the principal and agent, in respect to the wrongful or tortious, as well as the rightful acts, of the agent, done in the course of his employment, is an incident which the law has wisely attached to the relation, from its earliest history.” “If then the act of the agent be the act of the principal in law, and this legal identity is the foundation of the responsibility of the principal, there can be no escape from his indemnity to the full extent of civil responsibility.” An instruction that the jury might give punitive damages was upheld, and the plaintiff had judgment for $12,000. Whatever may be said of the practical consequences or the English of the opinion from which these extracts are made, it has the merit of going to the root of the matter with great keenness. On the other hand, other courts, more impressed by the monstrosity of the result than by the elegantia juris, have peremptorily declared that it was absurd to punish a man who had not been to blame, and have laid down the opposite rule without hesitation.1

I think I now have made good the propositions which I undertook at the beginning of this essay to establish. I fully admit that the evidence here collected has been gathered from nooks and corners, and that although in the mass it appears to me imposing, it does not lie conspicuous upon the face of the law. And this is equivalent to admitting, as I do, that the views here maintained are not favorites with the courts. How can they be? A judge would blush to say nakedly to a defendant: “I can state no rational ground on which you should be held liable, but there is a fiction of law which I must respect and by which I am bound to say that you did the act complained of, although we both know perfectly well that it was done by somebody else whom the plaintiff could have sued if he had chosen, who was selected with the utmost care by you, who was in fact an eminently proper person for the employment in which he was engaged, and whom it was not only your right to employ, but much to the public advantage that you should employ.” That would not Edition: current; Page: [414] be a satisfactory form in which to render a decision against a master, and it is not pleasant even to admit to one’s self that such are the true grounds upon which one is deciding. Naturally, therefore, judges have striven to find more intelligible reasons, and have done so in the utmost good faith; for whenever a rule of law is in fact a survival of ancient traditions, its ancient meaning is gradually forgotten, and it has to be reconciled to present notions of policy and justice, or to disappear.

If the law of agency can be resolved into mere applications of general and accepted principles, then my argument fails; but I think it cannot be, and I may suggest, as another ground for my opinion beside those which I have stated heretofore, that the variety of reasons which have been offered for the most important application of the fiction of identity, the liability of the master for his servant’s torts, goes far to show that none of those reasons are good. Baron Parke, as we have seen, says that case is brought in effect for employing a negligent servant. Others have suggested that it was because it was desirable that there should be some responsible man who could pay the damages.1 Mr. Justice Grove thinks that the master takes the risk of such offences as it must needs be should come.

I admit my scepticism as to the value of any such general considerations, while on the other hand I should be perfectly ready to believe, upon evidence, that the law could be justified as it stands when applied to special cases upon special grounds.2

[Other References on the Subjects of this Part are as follows:

In Select Essays:

The History of Agency (in Torts), by O. W. Holmes, Jr. (No. 63, Vol. III).

The Disseisin of Chattels, by J. B. Ames (No. 67, Vol. III).

In other Series and Journals:

Law and Morals, by J. B. Ames (Address at the 75th Anniversary of the Cincinnati Law School, 1908; reprinted in the Harvard Law Review, 1908, XXII, 97).

The Historical Method of the Study of Law, illustrated by the Master’s Liability for his Servant’s Tort, by J. M. Gest. (Address at the Temple College, Philadelphia, 1902.)]

64.: THE HISTORY OF TROVER1

THE classic count in trover alleges that the plaintiff was possessed, as of his own property, of a certain chattel; that he afterwards casually lost it; that it came to the possession of the defendant by finding; that the defendant refused to deliver it to the plaintiff on request; and that he converted it to his own use, to the plaintiff’s damage. And yet throughout the history of this action the last of these five allegations has been the only one that the plaintiff must prove. The averments of loss and finding are notorious fictions, and that of demand and refusal is surplusage, being covered by the averment of conversion. Under the first allegation the plaintiff need not prove that the chattel was his own property, or that he was in actual possession of it. It is enough to show actual possession as a bailee, finder, or trespasser, or to prove merely an immediate right of possession.

A greater discrepancy than that here pointed out between a count and the evidence required to support it can hardly be found in any other action. But it is generally true that averments in pleading, however inaccurate, superfluous, or fictitious they may be at a given time, were once accurate and full of legal significance. The count in trover is no exception to this rule. To make this clear, however, it is necessary to consider in some detail the remedies at the command of the plaintiff, in early English law, for the asportation, detention, or destruction of chattels. These remedies Edition: current; Page: [418] were the four actions, known as Appeals of robbery or larceny, Trespass, Replevin, and Detinue.

65.: THE HISTORY OF THE LAW OF DEFAMATION1

IF the laws of each age were formulated systematically, no part of the legal system would be more instructive than the law relating to defamation. Since the law of defamation professes to protect personal character and public institutions from destructive attacks, without sacrificing freedom of thought and the benefit of public discussion, the estimate formed of the relative importance of these objects, and the degree of success attained in reconciling them, would be an admirable measure of the culture, liberality, and practical ability of each age. Unfortunately the English law of defamation is not the deliberate product of any period. It is a mass which has grown by aggregation, with very little intervention from legislation, and special and peculiar circumstances have from time to time shaped its varying course. The result is that perhaps no other branch of the law is as open to criticism for its doubts and difficulties, its meaningless and grotesque anomalies. It is, as a whole, absurd in theory, and very often mischievous in its practical operation.

Nevertheless, the existence of any body of legal rules is at least prima facie ground of justification. Some, it may be, are wholly pernicious; but they must have had some origin, and the longer they have existed the greater is the Edition: current; Page: [447] presumption that they have some utility. They can be accounted for only by discovering the special circumstances out of which they arose, and the forces to which they have been exposed. By studying the way in which they have grown, and the functions which they have discharged, we can best arrive at a sound conclusion concerning their real nature and value.

Early in the middle ages reputation was amply protected in England by the combined secular and spiritual authorities. In the course of the nationalization of justice by the king’s judges the jurisdiction of the seignorial courts fell into decay; and, after a long and bitter struggle, the jurisdiction of the ecclesiastical courts was also absorbed by the royal tribunals. When, however, the king’s courts acquired jurisdiction over defamation, during the latter half of the sixteenth century, various social and political conditions combined to contract the actionable right, or remedy. The king’s courts granted only a limited remedy, the selection being based partly upon the character of the imputation, partly upon the consequences resulting therefrom; moreover, even this limited remedy was little concerned in theory with the right to reputation as such. By reason of its growth in this way the early common law of defamation consisted merely of a series of exceptions to entire license of speech. When, at length, early in the seventeenth century, the potentialities of the printing press dawned upon the absolute monarchy, the emergency was met, not by further additions to the list of actionable imputations, but by a direct importation of the Roman law, without regard to Roman limitations, and with certain additions adapted to the purpose in hand. This special provision for written or printed defamation, first adopted in the criminal law, eventually became also a principle of civil judicature. In this way a new principle of actionable defamation, based upon mere form, was introduced in the law. The original common law doctrine of defamation, based upon the nature of the imputation, became stereotyped as the law of spoken defamation, or slander; the doctrine inherited from Roman law, through the Star Chamber, became the law of written Edition: current; Page: [448] and printed defamation, or libel.1 The English law of defamation, therefore, was first limited by a process of selection, and then confused by a formal distinction which is not only unknown in other systems of law,2 but is also wholly accidental in origin and irrational in principle.

The beginnings of the law of defamation among the Germanic people take us back to the first stages in the development of organized society. The blood feud had supplanted indiscriminate vengeance, but the substitution of the wer, or money payment, as compensation for injury, was not very old when the early Leges Barbarorum were compiled. The process is very clearly marked in the case of defamation. The Lex Salica is much concerned with foul language. If one calls a man “wolf” or “hare” he must pay three shillings; for a false imputation of unchastity against a woman the penalty is forty-five shillings.3 By the terms of the Norman Edition: current; Page: [449] Costumal if one falsely calls another “thief” or “manslayer” he must pay damages, and, holding his nose with his fingers, must publicly confess himself a liar.1 It is a mistaken idea, therefore, to suppose that the primitive Teuton could feel only blows, and treated hard words of no account. Many forms of expression which in a civilized community would be regarded as violent abuse doubtless passed for common pleasantry, but reputation was dear to him and shame was keenly felt. Indeed, a good reputation was a defence to almost every crime.2

More than a thousand years ago King Alfred provided that the slanderer should have his tongue cut out, unless he could redeem it with the price of his head.3 The oldest English laws exact bot and wite of those who give bad names. The earliest records of pleadings in the local courts indicate the prevailing sensitiveness; disgrace or dishonor is one of the elements in almost every cause of action. If the defendant had beaten the plaintiff, this was done to the plaintiff’s damage to the amount of so many shillings, and to his dishonor (vituperium, dedecus, pudor, huntage) to the amount of so many shillings more.4

Actions for defamation were common in the seignorial courts in the thirteenth and fourteenth centuries.5 Many would doubtless resort to the duel, but for the mass of humble folk these courts probably did substantial justice. Edition: current; Page: [450] The manorial rolls show the operation of a jurisdiction sufficiently certain and severe to curb defamation of the baser sort. In these local courts the smirched reputation would be cleared before the very persons in whose presence it had been reviled. So that even at a later day when the king’s courts were well established, they do not deal with defamation; for such wrongs the humbler subjects sought their remedy in the more familiar, cheaper, and perhaps more trusted, local courts. When, at length, late in the sixteenth century, actions for defamation became common in the king’s courts, the manorial courts were in their decay.1

Meanwhile the Church punished defamation as a sin. Throughout Europe in the middle ages a great government existed, independent of the separate states; the temporal government was local, but there was a spiritual jurisdiction which was universal. From its humble beginnings in the efforts of the early Christian churches to persuade the faithful to lay their differences before their pastors, a jurisdiction had been evolved, through the canons established by the great councils during the fourth and fifth centuries, which had grown into a mighty system. It outgrew its foster-mother, the Roman law, and throughout Europe challenged the secular authority. From the ninth century to the close of the middle ages, the most autocratic monarch of Western Europe would not have dreamed of denying the authority of the canon law. It had its own tribunals, its own practitioners, its own procedure; it was a very real and active force in men’s lives.2 Indeed, monopolizing learning, as they did, the clergy, as individuals, were indispensable in the social life of the people; and, as an organized caste, the Church, in the performance of its professed duty to support the right and to protect the weak, had grasped the regulation of nearly everything that concerned the peaceful occupations of life.3

The demarcation of the real province of this ecclesiastical jurisdiction was a difficult task. The Church claimed and Edition: current; Page: [451] exercised jurisdiction, as of a spiritual nature, not alone over matters of ecclesiastical economy, but over matrimonial and testamentary causes and pledges, and was with difficulty prevented from appropriating the greater part of the province of contract. But its broadest claim was the correction of the sinner for his soul’s health. Under this head, along with the whole province of sexual morality, usury, and perjury came defamation. Contumelious words were among the various matters which had been embraced in Roman law under the title “injuria.” Injuria, in its legal acceptation, meant insult; but it was more comprehensive than the modern significance of the word. A person was insulted in many ways by direct force, as by assault and battery; or without direct force, as by shouting after him in the street so as to cause a crowd to follow him. Reproachful language which lessened one’s good fame was also an injury; and this class of injuries grew in ecclesiastical law into the distinct title “diffimation.” The Church, then, being answerable for the cleanliness of men’s lives, stayed the tongue of the defamer at once pro custodia morum of the community, and pro salute animæ of the delinquent. The usual ecclesiastical penance for the offence was an acknowledgment of the baselessness of the imputation, in the vestry room in the presence of the clergyman and church wardens of the parish, and an apology to the person defamed.1

William the Conqueror did not question the ecclesiastical jurisdiction. At the conquest all the tribunals were presided over by ecclesiastics, and for nearly a century thereafter many of the king’s judges were ecclesiastics. The Conqueror simply separated the ecclesiastical from the civil jurisdiction by a historic ordinance commanding that no bishop or archdeacon should thereafter hold pleas relative to ecclesiastical matters, as theretofore, in the county court. Shortly afterwards, however, the rivalry between the secular Edition: current; Page: [452] and spiritual jurisdictions began. One of the first limits put upon the Church’s pretensions to punish sin was the requirement that if the sin was also an offence which the temporal courts could punish, the spiritual judges were not to meddle with it. The first statute in which defamation is mentioned dates from the thirteenth year of Edward I. In specifying certain cases “wherein the king’s prohibition doth not lie,” it was provided: “And in cause of defamation it hath been granted already that it shall be tried in a spiritual court where money is not demanded.”1 That is, the temporal and spiritual courts would seem to have divided the cause of action, the forum depending upon whether money was demanded. This line of demarcation becomes very significant in after times; but apparently it bore no immediate fruit, for it is long before we find actions of defamation in the king’s courts. Indeed, as soon afterwards as the ninth year of Edward II it was enacted that corporal penance in defamation might be commuted for a money payment, “the king’s prohibition notwithstanding.”2 A statute of the succeeding reign, limiting the exercise of the spiritual jurisdiction so as not to deter from the prosecution of the offenders before the king’s justices,3 points the other way, and presages the long and bitter struggle between Church and State over the administration of justice.

Apart from the growing power of the king’s courts, the tyranny and corruption of the ecclesiastical courts had, long before the Reformation, aroused a very strong feeling of antipathy. Their inquisitorial procedure was little calculated to commend itself. Most of the cases were instigated by the obnoxious apparitors attending the various courts, who gathered in the gossip of the day, and retailed it to the court as a ground for denunciation and prosecution.4 Then, too, it is surprising that injured persons should have been content so long with the very limited satisfaction of seeing their Edition: current; Page: [453] defamers doing penance in a white sheet.1 These considerations doubtless contributed towards the ultimately successful aggression of the king’s courts. Before the Commonwealth the jurisdiction of the Church had been crippled.2 It survived in theory without any adequate means of enforcement,3 and was finally abolished altogether in the second decade of Victoria’s reign.4

Archdeacon Hale’s Precedents include a number of interesting causes of defamation during the period from 1475 to 1610. Out of some seven hundred causes collected, about six per cent concern defamation. As may be inferred from the fact that the vast majority of the cases collected relate in one way or another to sexual immorality, the majority of the slanders alleged are those which impute this offence.5 In three cases the defamation was in writing, but no distinction seems to have been taken on that ground; in one of the later cases it is expressly declared that no distinction is to be taken as to mere form.6

While as yet the bulk of the nation found a remedy for defamation in the seignorial and ecclesiastical courts, there was still another jurisdiction, during part of this time, open to a limited aristocracy, official or otherwise, and administered by the king’s council. This was the statutory offence known as De Scandalis Magnatum. The original statute, enacted in 1275, provided:

A subsequent act in the reign of Richard II recites the former act against “devisers of false news and of horrible and false lies, of prelates, dukes, earls, barons, and other noble and great men of the realm, whereby great discord hath arisen, and whereof, great peril and mischief might come to all the realm, and quick subversion and destruction of the said realm, if due remedy be not provided,” and then continues:

These statutes were construed with the generous comprehensiveness which characterized the activities of the king’s council.2 The criminal remedy was enforced by the council, sitting, according to Crompton, in the “starred chamber.”3 Although the statutes had also a civil aspect, the civil remedy was seldom used. The last action under these statutes was in 1710; but they were formally repealed only in recent times.4

The action De Scandalis Magnatum was of little importance in itself, but in its tendency and ultimate consequences it had a very significant bearing upon the law of defamation. Protecting none but the great men of the realm who, on account of their noble birth or official dignity, could not or would not demean themselves either by personal encounter or by resort to any other jurisdiction than that of their sovereign, these statutes are hardly to be taken as a recognition by the royal authority of the right to reputation. They were Edition: current; Page: [455] in fact directed rather against sedition and turbulence than against ordinary defamation. We know from their context and from contemporaneous history that their immediate cause is to be found in the plain speaking and homely wit of the Lollard rhymes current in the days of the peasants’ revolt. The political songs current in the Plantagenet times sounded the voice of the people in public affairs. Indeed, for centuries the song and ballad writers were the only spokesmen of the people in political affairs. It was they who gave voice to popular criticism, discontent and rejoicing, in a form, moreover, in which every mood of passion was embodied with a condensation of force and feeling to which the raillery of sadness of music added its own significance. It was with reference to such a time that one can appreciate the force of Fletcher’s well-known sentiment that the making of the people’s songs is a greater influence than the making of their laws.

The significance of the action De Scandalis Magnatum is, then, that it was directed against political scandal, and that the law was administered in the Star Chamber. This cognizance of defamation considered as a political and criminal offence was repeatedly confirmed, and as to particular cases, extended by subsequent statutes. It was a familiar jurisdiction, and one which constantly grew with exercise. Hence it is not surprising to find that by the time of Elizabeth the Star Chamber had assumed jurisdiction of cases of ordinary or non-political defamation, which it decided in the way of criminal proceedings. There was indeed, a measure of justification for this course. The duel was still a common method of vindication among those who did not come within the terms of the statutory remedy. Now the Star Chamber made every effort, in the interest of the public peace, to suppress duelling.1 But it might well feel that it was idle to prohibit this ancient remedy and offer no substitute. Therefore it Edition: current; Page: [456] took cognizance of both political and non-political defamation in the interests of public tranquillity.1

Finally we come to the king’s courts of common law, which, prior to the reign of Elizabeth, practically gave no remedy for defamation. This fact is, of course, at variance with modern ideas, according to which the administration of justice is regarded as the inevitable and exclusive function of the state. But a glance at the condition of Europe in the middle ages will show that state justice was then very feeble. Men were judged by their lords, by their fellow burghers, by their priests, but they were seldom judged by the state. In England the jurisdiction of the state grew more rapidly than elsewhere. The development of the system of writs, by means of which the king’s justices built up the jurisdiction of the royal courts, practically ceased with Henry III; henceforth judicial legislation proceeded only by the slow stages of decision and precedent. Edward I, however, carried on the process with a new conception. Law had been declared by kings, by landowners, by folks, by judges, by merchants, by ecclesiastics. By combining all these forces in legislation we get a law which is stronger, better, and more comprehensive than the separate laws which preceded it. For more than two centuries this conception of national law found a serious rival in the canon law, but with the Reformation the modern idea of law was realized.2

For the statement that pleas of defamation were not entertained in the king’s court we have express authority. The earliest mention of the offence in this jurisdiction occurs in a picturesque dispute between two Irish magnates, which had been removed in 1295 to Westminster, where the whole process was annulled for errors, foremost among which was the fact that the case had begun with a charge of defamation—“and it is not used in this realm that pleas of defamation should be pleaded in the king’s court.”3 The silence of the Year Books and of the Abridgments confirm this statement. Edition: current; Page: [457] In the Year Books, from the first year of the reign of Edward III to the last year of Henry VIII, a period of two hundred and twenty years, there are in all only ten cases of defamation; one in the time of Edward III, three under Edward IV, one under Henry VII, and five under Henry VIII. The oldest Abridgments, Statham’s (1494) and Fitzherbert’s (1563), do not mention the ‘action sur le cas pur parolx’; and Brooke’s Abridgment (1573) contains only two paragraphs under this head.1 This brings us to the reign of Elizabeth, which marks a turning point.

The king’s courts, then, did not usually entertain such actions. But, as already shown, this denial of a remedy in the king’s courts was no denial of a right. There were other courts where reputation was defended. Only as the old local courts fell into decay did denial of a remedy at Westminster come to be a denial of a right. This may serve to explain the few instances in which, in early times and under exceptional circumstance, we do come across the action in the king’s courts. The fact that when the action does first appear it is in the form of a special action on the case is quite conclusive that there was no remedy at common law prior to the statute of Westminster the Second. Prior to that time the right was probably adequately protected by the seignorial courts. When however, these local courts had fallen into decay, the question of royal jurisdiction would become more important. But by that time the task was not an easy one. The time had passed when a new form of action could be created without statute, which made it necessary to discharge the new function by means of an action on the special case for words, under the statute of 13 Edward I.2

The principal difficulty doubtless arose from the fact that the ecclesiastical courts, having from remote times corrected the slanderer for his soul’s health, had, owing to the decay of the local courts, come to be regarded as having, in some measure, an exclusive right to deal with defamation. The statute Circumspecte agatis, passed in the same year as the statute of Westminster the Second, is an indication of the demand, which had even then become pronounced, that more definite bounds should be set to the ecclesiastical jurisdiction. But the Church strenuously resisted all such attempts. The common law courts resorted to prohibitions. The ecclesiastical courts, on their side, wielded the powerful weapon of excommunication. The protracted struggle has ended in the complete victory of the secular jurisdiction only in our own day. The law of defamation, in common with most of the other subjects originally within the spiritual jurisdiction, still bears the scars of this contest, and some of its doctrines can be explained in no other way.

However acquired, cases of defamation begin to appear in the king’s courts soon after the last Year Books. During the reigns of Elizabeth, James I, and Charles I, the reports teem with such cases, and the bulk of litigation in defamation at once assumed very large proportions.

It was during this period that the rules of actionability were formulated which in aftertimes came to be applied exclusively to oral defamation. There was as yet, of course, no distinction at common law between slander and libel. The law thus evolved by no means covered all defamatory words; only certain specific imputations were actionable. The principle of selection was founded partly upon the character of the imputation, partly upon the consequences arising from it. The exceptions to unbridled license of speech founded upon the nature or substance of the charge were: imputations of an indictable offence or crime; imputations of having certain contagious disorders, i. e., syphilis, leprosy, and the plague; any imputation affecting a man’s reputation for skill and address in his business, office, trade, profession, or occupation, which tended to cause his position to be prejudicially affected. The other exception, founded upon consequences, Edition: current; Page: [459] allowed an action for any imputation which had in fact directly caused special damage.1

How the law came to be thus circumscribed is not entirely clear. The conditions under which the common law jurisdiction was acquired—i.e., the struggle with the ecclesiastical courts, and the necessity of exercising jurisdiction through the medium of an action on the special case for words, probably lie at the root of the matter.2 In a general way the early cases throw some light. Naturally the law seems new and unsettled. The judges assert that many kinds of defamatory imputations are merely spiritual, and as such are within the legitimate province of the courts Christian, while others are strictly temporal. It is curious to find the judges thus early discouraging the action by the application of the most absurd subtleties and refinements. Slanders were construed like legal writs. The judges were guided by the principle which they called mitior sensus, according to which language which could by any process of scholastic ingenuity be tortured into a harmless significance went without remedy. The probable explanation of this attitude is the large amount of litigation of this kind, which perhaps biased the judges against the action. Coke expressed the prevailing feeling in Croft v. Brown:

The judges seem to have begun to draw a distinction between words actionable per se and those actionable only on proof of special damage in the exercise of a discretionary power of allowing or disallowing actions. Early in the seventeenth century it was stated that

And nearly a century later Holt observed that

But their discretion came at length to be exercised according to fixed rules, and these rules became fixed law.

The conditions and the habits of thought prevailing in early society afford some explanation why it was not imperatively necessary to provide legal redress for slanders and insults of such a nature as to injure the character or hurt the sensibility, unless they were also such as to result in legal damage to the person against whom they were directed. Men were not more courteous by nature or inclination then than now. They were restrained by a code which formed no part of the legal system, but which was nevertheless a very potent instrument. Men could and did avenge themselves without calling in the assistance of the law, and public opinion for centuries sanctioned the “code of honor.” But with the progress of civilization it became apparent that dueling was not only foolish and vicious in principle, but a menace to the public peace as well. As the sanction of public opinion was gradually withdrawn, the laws for the preservation of the peace were continually strengthened. But in the final result, the law suppressed the instincts of nature and gave no substitute.3

Thus stood the law when the rapid development of the art of printing aroused the absolute monarchy to a keen sense of the danger of this new method of diffusion of ideas. In early times libels must have been comparatively rare and harmless: rare because few could write, harmless because Edition: current; Page: [462] few could read. The invention of printing, however, gave a new impulse to composition. Caxton had set up his press at Westminster in 1476, and the art spread rapidly during the sixteenth century. From the very first Church and State alike assumed to control the press, as they had previously regulated the diffusion of manuscripts.

The Church had long suppressed the diffusion of ideas which it deemed pernicious. The first general council of Nice forbade the works of Arius, and subsequent councils had condemned the works of Origen and others. Imperial power co-operated by burning condemned books. But this total destruction of pernicious books was no longer feasible after the invention of printing. The Church endeavored to forestall publication by prohibiting the printing of all works save such as should be first seen and allowed; publications without such license were burned, as before. As this method did not meet with complete success, it was supplemented by indices or catalogues of books, the reading of which by the faithful was prohibited. Such lists were issued in many parts of Europe by sovereigns, universities and inquisitors during the sixteenth century, beginning with that issued by Henry VIII in 1526. Pope Paul IV issued an index in 1559, but the papacy as such took no part in the process until the Council of Trent, the outcome of which was the famous index of Pius IV, in 1564.

In England the censorship of the press passed with the ecclesiastical supremacy to the crown. The censorship became part of the royal prerogative, and the printing of unlicensed works was visited with the most severe punishment. Printing was further restrained by patents and monopolies. The privilege was confined, in the first instance, under regulations established by the Council in Mary’s reign, to the Stationer’s Company,1 which had power to seize all other publications; and the number of presses and the whole matter of printing was strictly limited in all its details. Under Elizabeth the censorship was enforced by still more rigorous penalties, including mutilation and death. All Edition: current; Page: [463] printing was interdicted elsewhere than in London, Oxford and Cambridge; nothing whatever was allowed to be published until it had been first “seen, perused and allowed” by the Archbishop of Canterbury or the Bishop of London, except only publications by the queen’s printers, appointed for some special service, or by law printers, for whom the license of the chief justices of either bench was sufficient. This was the situation when, at the accession of James I, all these repressive measures were found to be inadequate to suppress the rising tide of public opinion. The theological controversies of the sixteenth century were passing into the political controversies of the seventeenth. New forms of literature had arisen. The heavy folio, written for the learned, was succeeded by the tract and the flying sheet, to be read by the multitude. Some effective regulation was imperative. The forced construction of the various treason statutes was too cumbersome as an instrument of suppression. The civil action for defamation, then in its infancy, was, of course, entirely inadequate.

The task was at length undertaken by the Star Chamber. The character of this tribunal rendered its selection almost inevitable. It was composed of the highest dignitaries of Church and State,1 and it exercised practically unlimited authority. Formally constituted a court of criminal equity by Henry VII, the Star Chamber’s jurisdiction was based upon the theory which had become familiar in the civil law through the operations of the court of Chancery. There were wrongs which could not be effectively remedied by the ordinary courts of law, and which could not be overtaken immediately by legislation. The venerated forms of action did not cover all classes of wrongs and crimes; nor was even-handed justice always administered between the weak and the powerful. It was necessary that there should be a court with the unrestrained power to do substantial justice. The Star Chamber was thus empowered. It disregarded forms; it was bound by no rules of evidence; it sat in Edition: current; Page: [464] vacation as well as in term time; it appointed and heard only its own counsel, thereby not being troubled with silly or ignorant barristers, or such as were idle and full of words. Moreover, it was natural that the members of this tribunal should exercise formal jurisdiction over a matter which they had so long attempted in various ways to control, and with the pernicious effects of which they were deeply impressed.

Jurisdiction over this new and alarming form of scandal was assumed, then, by the Star Chamber. What law should govern it? The law administered by the common law courts was of course out of the question. Its researches were quite naturally directed by its ecclesiastical members to that other great system of law in which they had been trained; and, finding it to the purpose, the court boldly imported the Roman criminal law. The new law was first set forth in 1609, in the case De Libellis Famosis,1 as reported by Coke, and, later, was more fully stated by Hudson in his Treatise on the Star Chamber.2

Now the Roman law had two sets of provisions for defamation—the comparatively mild law of injuria, and the severe provisions of the libellus famosus. In early Roman law, as in most primitive systems, verbal injuries were treated as criminal or quasi-criminal offences. The essence of the injury was not the pecuniary loss, which could be compensated by damages, but the personal insult, which must be atoned for—a vindictive remedy which took the place of personal revenge. We find reference, then, first, in the Twelve Tables, to the libellous chant or song, which is the form of defamation obtaining widest currency, and therefore most keenly felt, in early society. This was severely punished as a crime. Minor offences of this nature came under the general conception of injuria, which included ultimately every form of direct personal aggression, whether with or without force, which involved insult or contumely.

In later Roman jurisprudence verbal injuries were dealt with in the edict under two heads. The first comprehended Edition: current; Page: [465] defamatory and injurious statements which were made in a public manner (convicium contra bonos mores). The essence of the offence in this case lay in the unwarrantable public proclamation, in the contumely which was offered to a man before his fellow citizens. In such cases the truth of the statements was no justification for the unnecessarily public and insulting manner in which they had been made. The second head included defamatory statements which were made in private. Since the offence in this case lay in the imputation itself, not in the manner of its publication, the truth was a complete defence; for no man had a right to demand protection for a false reputation. The law thus aimed to give ample scope for the discussion of personal character, while it forbade the infliction of needless insult and pain. The remedy for verbal injuries was long confined to a civil action (actio æstimatio) for a money penalty, which was estimated according to the gravity of the case, and which, although vindictive in character, included the element of compensation. Imperial legislation subsequently established supplementary criminal actions under which certain kinds of defamation were punished with great severity. These were the libelli famosi, particularly epigrams and pasquinades, which, being in their nature anonymous and scurrilous, were regarded as peculiarly dangerous and were visited with severe punishment, whether true or false. The unnecessarily public and offensive manner of their publication (they were generally scattered about the streets) precluded justification.1

We find, therefore, a distinction based upon the manner and extent of publication, but none between speech and writing; for the evil song of an early day coincides with the anonymous pasquil of later times in constituting the criminal offence. The crime was not based upon the form of the publication, but upon the character of the matter published, the extent of its diffusion, and its anonymous nature.

The Star Chamber, as the title of Coke’s case indicates, adopted provisions of the libellus famosus. The action arose out of an “infamous libel in verse” by which the Archbishop of Canterbury, deceased, and the then bishop of that diocese, were “traduced and scandalized.” The principal “points resolved” were the following:

After holding, without citing any authority, that

the report continues:

Hudson’s treatise begins with a description of the various ways in which a person might be libelled; he adds that the publishers of libels are as severely punished as the makers.

He points out

The case De Libellis Famosis is the formal starting point of the English law of libel. By it a new form of actionable defamation, based upon mere form, was introduced in the law. Apart from the disposition of the authorities to adopt the most stringent methods of suppression, there were some plausible grounds for this new doctrine of criminal libel. It was, of course, aimed directly at printing, although it included writing. Writing had been for centuries so rare an accomplishment that much weight was attached to anything written. Before the invention of printing libels were generally published by scattering papers containing them Edition: current; Page: [468] in the streets, or by posting them in public places. Such libels were generally against the government or those in authority. By the Theodosian Code the publication of such libels seems to have been looked upon as treason, and was punished as a high crime. In England such offences were generally brought within the generous scope of the law of treason and sedition. Coke mentions two cases of libels upon private individuals in the reign of Edward III, and in both cases the libeller was criminally punished. Now came a method of dissemination whose potentialities were unlimited, with all the dangers of anonymity, and in a more permanent form than writing. Moreover, seditious libel (and all libels were deemed seditious) is in its nature a sort of attempt, and the Star Chamber applied the doctrine that attempts and conspiracies to do anything unlawful were substantive offences.1

But it is apparent that the Star Chamber adopted the Roman law to its own use without regard to Roman limitations and with certain additions of its own, chief among which was the fundamental principle that libel is punishable as a crime because it tends to a breach of the peace. The Roman criminal law was directed against anonymous pasquinades. When, therefore, the Star Chamber sought to apply this law to a publication which was not anonymous, its inapplicability must have been at once pointed out. That this was done is made plain from what Hudson says about two gross errors that have crept into the world concerning libels.

This principle of the tendency of libels to a breach of the peace originated with the Star Chamber. It was not only a very shrewd addition to the law, as an instrument of suppression, but there was undoubtedly some semblance of the truth in the statement, as applied to the condition existing prior to the formation of an organized public opinion. While the law developed only through the pressure of outward needs, the statement of an unwelcome truth concerning another did not serve the useful public purpose that it does now because it did not reach the public eye. But it did undoubtedly tend in a semi-civilized state of society to stir the hot blood of those against whom it was made.1 Moreover, it must be remembered that the preservation of the public peace was still a very difficult and serious matter.

The Star Chamber, then, having taken over jurisdiction of libel with particular reference to discussion of affairs of Church and State, the idea that such libels were crimes and as such past justification, was formally introduced in English law; a tribunal of which common law judges were constituent members, drew a real distinction between spoken and written defamation of a political kind. Through its jurisdiction as a court, and as the representative of the royal prerogative, the Star Chamber was in immediate control of the press during the reigns of James I and Charles I, and suppressed political and religious discussion with the utmost severity. By its famous ordinance of 1637 the matter of printing was regulated anew. The number of master printers was limited to twenty, who were to give sureties for good behavior, and were to have not more than two presses and two apprentices each; and the number of letter founders was limited to four. The penalty for practising the arts of printing, or making any part of a press or other printing materials, by persons disqualified or not apprenticed Edition: current; Page: [470] thereto, was whipping, the pillory, and imprisonment. Even books which had been once examined and allowed were not to be reprinted without a fresh license, and books brought from abroad were to be landed at London only, and carefully examined by licensers appointed by the Archbishop of Canterbury and the Bishop of London, who were empowered to seize and destroy such as were seditious, schismatical or offensive. Periodical searches of booksellers’ shops and private houses were also authorized and enjoined.

Although the Star Chamber was abolished by the Long Parliament in 1640, the judges, the law, and the censorship remained largely the same. By orders of the Long Parliament in 1642 and 1643 the licensing system of the Star Chamber was practically continued. Shortly after the Restoration the licensing system was placed upon a legal basis by statute.1 This act expired in 1679, and does not appear to have been immediately renewed, although the censorship was continued during the remainder of this reign. Under James II the licensing act was twice renewed by statute,2 but lapsed finally in 1695. The incorporation of the Star Chamber doctrine of libel into the common law seems to have been coincident with the waning power of the censorship. It is not at all surprising that Restoration judges, imbued with the Star Chamber doctrines, replaced it with an equally efficient weapon. In 1680, less than a year after the expiration of the Restoration statute, Chief Justice Scroggs announced that the judges had twice declared unanimously, when summoned by the King’s command to give their opinions as to what should be done to regulate the press, that, besides publications scandalous to the government or to public or private persons, all writers of false news, though not scandalous or seditious, were indictable.3 Later in this year the same judge repeated this statement in even more comprehensive terms:

It is to this juncture that we must look for the creation of that doctrine, first announced in the common law courts by Hale, that although words “spoken once” would not be actionable, “yet they being writ and published” become actionable. The later Roman law of the libellus famosus thus become part and parcel of the English common law. The formal distinction was apparently introduced into the civil law by the same process of reasoning that led the Star Chamber to assume cognizance over non-political defamation. The Star Chamber had been abolished; press licensing was waning. How were these non-political, non criminal libels to be restrained if men no longer had the vindication of the duel? The difficulty was met by the creation of a new tort, written defamation.2

The civil doctrine of libel was first announced by Lord Chief Baron Hale in King v. Lake in the Exchequer, in 1670.3 There are a few earlier cases in which the defamation was in writing, but on no occasion was this regarded as a title to a remedy if the written matter did not come within recognized exceptions.4 King was a barrister who claimed to have been “damnified in his good name and credit and profession” by reason of the fact that Sir Edward Lake had written of a petition to Parliament drawn up by King that it was “stuffed with illegal assertions, ineptitudes and imperfections, and clogged with gross ignorances, absurdities and solecisms.” Hale held that “although such general words spoken once without writing or publishing them would not be actionable, yet here, they being writ and Edition: current; Page: [472] published, which contains more malice than if they had been once spoken, they are actionable.” In Harman v. Delany,1 the court held that

From this time on the series of cases establishing the new tort increases. The matter may be said to have been finally determined by the judgment of the Exchequer Chamber in the case of Thorley v. Lord Kerry, in 1812.2 In this very important case the whole subject was ably argued by eminent counsel. Sir James Mansfield, in delivering the judgment of the court, reluctantly admitted that “the distinction has been made between written and spoken slander as far back as Charles the Second’s time.”

The historical development of actionable defamation has now been traced to the time when the distinction as to form became fixed. Written defamation is libel; spoken defamation is slander. Libel is a crime as well as a tort; slander of a private individual may be a tort, but is no crime. Any written words which injure one’s reputation are libellous; but many words which would be actionable if written are not actionable if merely spoken. In the case of slander a Edition: current; Page: [473] plaintiff must satisfy the jury that the words spoken impute the commission of a crime, or the presence of certain contagious disorders, or that they disparage him in the way of his office, profession or trade, in all other cases he must prove special damage, that is, that he has sustained some pecuniary loss as a direct consequence of the utterance of the words complained of.

66.: RESPONSIBILITY FOR TORTIOUS ACTS: ITS HISTORY1

“NO conception can be understood except through its history,” says the Positivist philosopher; and of no legal conception in Anglo-American law is this more true than of the notion of Responsibility for Tortious Acts. By this phrase is indicated that circumstance or group of mental circumstances attending the initiation and eventuation of an acknowledged harmful result, which induces us to make one person rather than another (or than no one at all) civilly amenable to the law as the source of the harmful result (and independently of whether this person can show some recognized justification for the harm). It is this notion whose history we find it possible to trace back in a continuous development in our Germanic law, without a break, for at least two thousand years.

To get a starting-point, let us look back from present principles. The law to-day, so far as we are entitled to take it as standing on a rational basis, distinguishes classes of cases which may be roughly generalized for present purposes as follows: (1) Cases where the source of harm is Edition: current; Page: [475] pure misadventure, as where a customer is handling a supposed unloaded gun in a gun-store, and it goes off and injures the clerk; (2) Cases where no design to injure exists, but a culpable want of precaution and foresight is found; (3) Cases where no design to injure exists, and yet no inquiry into the actor’s carefulness is allowed,—in other words, where he does the specific harm-initiating act “at his peril,” as where he fires a gun in the street, or sells goods which prove to be those of another; (4) Cases where actual design to produce the harm exists.1 Now, the thing to be noted is that the primitive Germanic law knew nothing of these refinements; it made no inquiry into negligence, and it based no rule on the presence or absence of a design or intent; it did not even distinguish, in its earlier phases, between accidental and intentional injuries. The distinctions of to-day stand for an attempt (as yet more or less incomplete) at a rationalized adjustment of legal rules to considerations of fairness and social policy. But the indiscriminate liability of primitive times stands for an instinctive impulse, guided by superstition, to visit with vengeance, the visible source, whatever it be,—human or animal, witting or unwitting,—of the evil result. Both these extremes are fairly clear; it is the transition from one notion to the other which forms the interesting and complex process.

In endeavoring to realize the nature of the primitive canons of Responsibility, one must take into consideration the essentially superstitious and unreasoning spirit which pervaded the jural doings of primitive society; for the notion here dealt with was only one of the vehicles of his expression. One need not here to call to mind in detail the characteristics Edition: current; Page: [476] of primitive culture;1 only certain of the more germane may be noted. The instinct of revenge, as an aggressive reaction from inflicted pain, preceding any developed sense of justice;2 the prevalence of clan-organization and clan-responsibility;3 the idea of transgression as associated with ceremonial observances;4 the implicit belief in taboo and curse;5 the propitiation of ghosts and deities by gifts and sacrifices;6 the sense of pollution and contamination (as by the touching of blood or of a corpse);7 the inheritance of guilt; the appeal to a decision of the Deity or of chance in litigation (as by the subjection to ordeals, the swearing of exculpatory oaths, the engaging in formal combat);8 the arbitrary formalism of words and phrases in pleading and oaths,9—these give the tone to the times. In the light of these it is easy to understand that the notion of Responsibility for Harmful Results was determined largely by crude primitive instincts of superstition,—that our ancestors were satisfied with finding a visible source for the harm and following out their ideas of justice upon it.

It must be remembered, moreover, that we are here dealing with a sentiment characteristic of primitive justice everywhere. It was, beyond question, universal. It appears not only in the strictly Germanic peoples, but in the records of all the race-stocks, however mixed, of post-Christian Europe,—the Edition: current; Page: [477] Scandinavian,1 the Flemish-Dutch,2 the Celtic,3 the French,4 the Spanish,5 the Italian,6 the Slavic,7 the Hungarian.8 It is found in earliest Greece9 and earliest Rome.10 Edition: current; Page: [478] It is equally marked in the Semitic races—Jews1 and Mohammedans—,2 as well as their predecessors in Chaldea and Egypt;3 and in the totally unrelated Hindus4 and Chinese,5 as well as the Japanese.6 And in the primitive tribes still surviving everywhere—in Africa, Australia, America, and Asia—it is still observable.7 In the two following passages, its general bearing is broadly stated:

In this particular field, too, there are numerous manifestations, all akin. The doer of a deed was responsible whether he acted innocently or inadvertently, because he was the doer;2 the owner of an instrument which caused harm was responsible, because he was the owner, though the instrument had been wielded by a thief;3 the owner of an animal, the master of a slave, was responsible because he was associated with it as owner, as master;4 the master Edition: current; Page: [481] was liable to his servant’s relatives for the death, even accidental, of the servant, where his business had been the occasion of the evil;1 the rachimburgius, or popular judge, was responsible for a wrong judgment, without regard to his knowledge or his good faith;2 the oath-helper who swore in support of the party’s oath was responsible, without regard to his belief or his good faith;3 one who merely attempted an evil was not liable because there was no evil result to attribute to him;4 a mere counsellor or instigator of a wrong was not liable, because the evil was sufficiently Edition: current; Page: [482] avenged by taking the prime actor,1 and where several cooperated equally, a lot (frequently) was cast to select which one should be amenable;2 while the one who harbored or assisted the wrongdoer, even unwittingly, was guilty, because he had associated himself with one tainted by the evil result.3 Of these various forms of the primitive notion which determined responsibility, we are here concerned with only a few,—those that have a more or less intimate connection with later doctrines of the English law of torts, and are therefore for us more worth tracing from early times.

These may be, for convenience, grouped into four classes, each one of which will be to better advantage followed out separately,—to be distinguished according as the harmful results may be traced back to (a) a personal deed; (b) an animal; (c) an inanimate thing; (d) a servant or slave. It will be convenient also to take up first the general Germanic notion, and follow it down to, say, the Norman Conquest, and then to keep to English soil, and trace down the later forms. As it happens, this division falls in fairly with epochs of doctrinal change.4

[Other References on the Subject of this Part are as follows:

Folcland, by Paul Vinogradoff (English Historical Review, 1893, VIII, 1).

The Transfer of Land in Old English Law, by Paul Vinogradoff (Harvard Law Review, 1907, XX, 532-548).

Changes in the American Law of Real Property. Anon. (American Jurist, 1829, pp. 28-97).

Les fondations [charitable gifts] en Angleterre; étude de droit comparée, by Jean Escarra (Paris, 1907).

History of Land Tenure in Scotland and England, by R. Campbell (Law Quarterly Review, 1885-86, I, 175-183, 400-411, II, 166-176).

History of the Irish Land System, by W. O. Morris (Law Quarterly Review, 1887, III, 133-157).

Alienation of Estates Tail, by H. W. Elphinstone (Law Quarterly Review, 1890, VI, 280-288).

Short Studies in the Early Common Law; II, Rents-Charge, by W. G. Hammond (Green Bag, 1892, IV, 283-292).

Early English Land Tenures, by M. Kovalevsky (Law Quarterly Review, 1880, IV, 266-285).

The Seisin of Chattels, by F. W. Maitland (Law Quarterly Review, 1885, I, 324-341).

The Beatitude of Seisin, by F. W. Maitland (Law Quarterly Review, 1888, IV, 24-39, 286-299).

Possession for a Year and a Day, by F. W. Maitland (Law Quarterly Review, 1889, V, 253-264).

Feoffment and Livery of Incorporeal Hereditaments, by L. O. Pike (Law Quarterly Review, 1889, V, 29-43).

Origin of Rights of Common, by T. E. Scrutton (Law Quarterly Review, 1887, III, 373-398).

History of Legislation concerning Property in England, by J. E. R. de Villiers (London, 1901).

Changes of Real Property Law in the United States, by G. E. Beers (in Two Centuries of Growth of American Law, Yale Bi-Centenary Studies, New York, 1901).

Origin of the System of Recording Deeds in America, by J. H. Beale, Jr. (Green Bag, 1907, XIX, 335).]

67.: THE DISSEISIN OF CHATTELS1