Hostname: page-component-78c5997874-ndw9j Total loading time: 0 Render date: 2024-11-15T07:33:42.272Z Has data issue: false hasContentIssue false
  • English
  • Français

Negotiable Instruments and the Federal Courts in Antebellum American Business*

Published online by Cambridge University Press:  11 June 2012

Tony A. Freyer
Tony A. Freyer
Affiliation:
Assistant Professor of History, University of Arkansas, Little Rock
Get access Rights & Permissions [Opens in a new window]

Abstract

That human needs and social realities are the roots of all systems of jurisprudence is nowhere more demonstrable than in the evolution of the law of business. Professor Freyer shows that neither the English common law of negotiable instruments nor the modifications made in it in the colonial era were adequate in the lusty, far-flung, and rapidly growing young nation that the Constitution of the United States created. Innovation, he reveals, promptly followed.

Type
Articles
Information
Business History Review , Volume 50 , Issue 4 , Winter 1976 , pp. 435 - 455
Copyright
Copyright © The President and Fellows of Harvard College 1976

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Frank, John P., “Historical Basis of the Federal Judicial System,” Indiana Law Journal, XXIII (April, 1948), 236–270Google Scholar; Friendly, Henry J., “The Historic Basis of Diversity Jurisdiction,” Harvard Law Review, XLI (February, 1928), 483–510CrossRefGoogle Scholar; Corwin, Edward S., “The Progress of Constitutional Theory between the Declaration of Independence and the Meeting of the Philadelphia Convention,” American Historical Review, XXX (April, 1925), 511–536CrossRefGoogle Scholar; Turner, Kathryn, “Federalist Policy and the Judiciary Act of 1801,” The William and Mary Quarterly, XXII (March, 1965), 30Google Scholar; Nevins, Allan, The American States During and After the Revolution, 1775–1789 (New York, 1969), 570–572Google Scholar; Wood, Gordon S., The Creation of the American Republic 1776–1787 (Chapel Hill, 1969), 454Google Scholar; Taft, William Howard, “Criticisms of the Federal Judiciary,” American Law Review, XXXIX (September-October, 1895), 643–674Google Scholar; Faulkner, Robert K., The Jurisprudence of John Marshall (Princeton, 1968), 70–74.Google Scholar

2 Cochran, Thomas C., “The Paradox of American Economic Growth,” Journal of American History, LXI (March, 1975), 935.Google Scholar

3 Hurst, James W., “Legal Elements in United States History;” Flemming, Donald and Bailyn, Bernard, eds., Law in American History (Boston, 1971), 76Google Scholar; Goebel, Julius Jr., Antecedents and Beginnings to 1801, Freund, Paul A., ed., The Oliver Wendell Holmes Devise History of the Supreme Court of the United States (New York, 1971), I, 655Google Scholar; Freyer, Tony, “Unity from Diversity: Commercial Stability and Swift v. Tyson (1842),” (Doctoral disseration, Indiana University, Bloomington, 1975)Google Scholar, support this thesis.

4 For “mercantile rivalry,” see Scheiber, Harry N., The Conditions of American Federalism: A Historian's View (Washington, D.C., 1966), 1–7Google Scholar; Porter, Glenn and Livesay, Harold C., Merchants and Manufacturers: Studies in the Changing Structure of Nineteenth Century Business (Baltimore, 1971), 29–32Google Scholar; Gilbert, Charles and Kroos, Herman K., American Business History (Englewood Cliffs, 1972), 77–106, 120–144Google Scholar; Atherton, Louis E., “The Pioneer Merchant in Mid-America,” University of Missouri Studies 14, no. 2 (1839) 102–116Google Scholar; Jones, Fred M., “Middlemen in the Domestic Trade of the United States, 1800–1860,” University of Illinois Studies in the Social Sciences 21, no. 3 (1937)Google Scholar; Woodman, Harold D., King Cotton and His Retainers: Financing and Marketing the Cotton Crop of the South, 1800–1925 (Lexington, 1968), 114–123Google Scholar; Klein, Joseph J., “The Development of Mercantile Instruments of Credit in the United States,” Journal of Accountancy 12 (1911), 321–345, 526–537, 594–607Google Scholar; Isaacs, Nathan, “Business Postulates and the Law,” Harvard Law Review, XLI (June, 1928), 1014–1030.CrossRefGoogle Scholar

5 As quoted in Swisher, Carl B., The Taney Period, 1836–64, Freund, Paul A., ed., The Oliver Wendell Holmes Devise History of the Supreme Court of the United States (New York, 1974), V, 320.Google Scholar

6 See note 4.

7 Temin, Peter, The Jacksonian Economy (New York, 1969), 31–35.Google Scholar

8 English Bill of Exchange Act of 1882, as quoted in Commercial Paper and Bills of Exchange of the World (Boston, 1915), 4.

9 See Klein, “Mercantile Instruments;” Isaacs, “Business Postulates;” Gilbert and Kroos, Business History, 120–144; Friedman, Lawrence M., A History of American Law (New York, 1973), 69, 35–38, 468–471Google Scholar; Redlich, Fritz, “The Promissory Note as a Financial and Business Instrument in the Anglo-Saxon World: A Historical Sketch,” Revue Internationale d'Histoire de la Banque Libraire Droz (Geneva, 1970), 271–297Google Scholar; Holdsworth, W. S., A History of English Law (16 vols., Boston, 1924), V, 60–154Google Scholar; XII, 524–542, VIII, 99–300; Beutal, Frederick K., “Colonial Sources of the Negotiable Instruments Law of the United States,” Illinois Law Review, XXXIV (May, 1939), 136–150Google Scholar, and “The Development of State Statutes on Negotiable Paper Prior to the Negotiable Instruments Law,” Columbia Law Review, XL (June 1940), 836–845. See below for discussion of the commercial law.

10 “Legal Protection of Good Faith,” Hunt's I (September, 1839), 230.

11 Ibid.; Holdsworth, English Law, V, 60–154; XII, 524–542; VIII 99–300.

12 See below, notes 36–42.

13 Story, Joseph, Commentaries on the Law of Bills of Exchange (Boston, 1846), 17.Google Scholar It is important to note that the distinction between bonafide transactions and accommodations was blurred and the law never settled upon clear definitions. It is probably true that in the realities of business practice, all accommodations might in fact rest on some bonafide transaction, but as will be seen below, the laws of the states were often unable to establish sound doctrines that recognized this; see also, Freyer, “Unity from Diversity,” 18–21.

14 See notes 36–42.

15 See notes 57–67 below; and Foster, B. F., Practical Summary of the Law and Usage of Bills of Exchange and Promissory Notes (Boston, 1837), 1–32.Google Scholar

16 Atherton, Lewis E., “The Problem of Credit Rating in the Ante-Bellum South,” The Journal of Southern History, XII (November, 1946), 534–556CrossRefGoogle Scholar; Atherton, “Pioneer Merchant,” 102–116; Woodman, King Cotton, 154–164; Madison, James H., “The Evolution of Commercial Credit Reporting Agencies in Nineteenth-Century America,” Business History Review, XLVII (Summer, 1974), 164–186CrossRefGoogle Scholar; Porter and Livesay, Merchants and Manufacturers, 29–34; Porter, Glenn, The Rise of Big Business 1865–1910 (New York, 1973), 42.Google Scholar

17 See note 15.

18 “Mercantile Law,” Hunt's Merchants' Magazine, I (January, 1839), 66.

19 Holdsworth, English Law, V, 60–154, XII, 524–542, VIII, 99–300; Holden, A History of Negotiable Instruments, 112–142; Story, Joseph, “The Progress of Jurisprudence,” Story, W. W., ed., The Miscellaneous Writings of Joseph Story (Boston, 1850), 205–206.Google Scholar

20 Ibid.

21 Chafee, Zechariah, “Colonial Courts and the Common Law,” Massachusetts Historical Society Proceedings, LXVIII (October, 1944-May, 1947), 132–159Google Scholar; Goebel, Julius Jr., “King's Law and Local Custom in Seventeenth-Century New England,” Columbia Law Re view, XXXI (March, 1931), 416–448CrossRefGoogle Scholar; Brown, Elizabeth G., British Statutes in American Law 1776–1836 (Ann Arbor, 1964) 1–45Google Scholar; Goebel, Antecedents, 1–145; see also Friedman, American Law, 69, 34–38, 468–471; Beutal, , “Negotiable Instruments,” Illinois Law Review, XXXIV (Mav, 1939), 135–150Google Scholar; Beutal, , “State Statutes,” Columbia Law Review, XL (June, 1940), 836–845.Google Scholar

22 Sullivan, James, The History of Land Titles in Massachusetts (Boston, 1801), 353.Google Scholar

23 Ibid., 354; Du Ponceau, Peter, A Dissertation on Federal Jurisdiction (Philadelphia, 1824), xixGoogle Scholar; Sampson, William, Sampson's Discourse (Washington City, 1826)Google Scholar; Sampson, William, “On the Common Law,” North American Review, XIX (July, 1824) 411–439Google Scholar; Swisher, Taney Period, 339–357; Friedman, American Law, 319, 351–355.

24 “The Law of Debtor and Creditor in Lousiana,” Hunt's Merchants' Magazine, XV (July, 1846), 71.

25 “Bankrupt Law,” Hunt's, X (January, 1841), 27.

26 “Law of Debtor Creditor,” Hunt's, XV (July, 1846), 71.

27 Swift, Zephaniah, A Digest of the Law of Evidence in Civil and Criminal Cases and a Treatise on Bills of Exchange and Promissory Notes (Hartford, 1810) vii-ix.Google Scholar

28 Freyer, “Unity from Diversity,” 66–126.

29 Kent, James, Commentaries on American Law (4 vols., New York, 12 ed., 1884), I, 473, 477–478.Google Scholar

30 Chipman, Daniel, An Essay on the Law of Contracts for Payment of Specific Articles (Middlebury, 1822), iv-vGoogle Scholar; ‘On Judicial Office,” The North American Magazine, V (December, 1834), 77–82; “Wheaton Reports,” North American Review, XVII (July, 1823), 121; “The Independence of the Judiciary,” North American Review, LVII (October, 1843), 400–432.

31 “On Chauncery Jurisdiction,” North American Review, Xl (July, 1820), 141–166; Goebel, Julius Jr., The Law Practice of Alexander Hamilton: Documents and Commentary (2 vols., New York, 1964) I, 32.Google Scholar Equity was a special body of jurisprudence, originally supposed to be founded on principles of natural justice, administered by the King's Chancellor in England. The primary purpose of equity jurisdiction was to overcome the rigid formalities and limitations in common and statute law. Over the centuries, equity developedits own system of principles and was carried to the colonies, where in many ways it developed independently.

32 See note 30; and Wood, Creation of the American Republic, 454; Nevins, American States, 70–72; Taft, , “Federal Judiciary,” American Law Review, XXXIX (September-October, 1895), 643–674.Google Scholar

33 Ibid.

34 See Freyer, “Unity from Diversity,” 83, for lengthy citation supporting this generalization.

35 Verplank, Guillan C., Speech When in Committee of the Whole in the Senate of New York, on Several Bills and Resolutions for the Amendment of the Law and the Reform of the Judicial System (Albany, 1839), 1–31Google Scholar; “Revisions of Laws of New York,” North American Review, XXIV (January, 1827), 193–209.

36 Bay v. Coddington, 5 Johns. Chauncery Rep. 56–77 (1821); see also Warren v. Lynch 5 Johns. 239 (1810).

37 Rosa v. Brotherson, 10 Wend. 85 (1833); Ontario Bank v. Worthington, 12 Wend. 593 (1834); Payne v. Cutler, 13 Wend. 605 (1834).

38 16 Wend. 659 (1837).

39 Bank of Salina v. Babcock, 21 Wend. 499 (1839); Bank of Sandusky v. Scoville, 24 Wend. 115 (1840).

40 Kent, Commentaries on American Law, 81–82; Swift, On the Law of Evidence, 327.

41 Homes v. Smyth, 16 Maine 177 (1839); Brush v. Scribner, 11 Conn. 388 (1836).

42 Riley and Van Amringo v. Johnson, 8 Ohio 526 (1838), Carlise v. Wishart, 11 Ohio 173 (1842); Platt v. Eads, 1 Blackf. 81 (1820), Elliott v. Armstrong 2 Blackf. 231 (1829); Atchison v. Davidson, 2 Pin. 48 (1847), Cook v. Helms, 5 Wis. 107 (1856). See Freyer, “Unity from Diversity,” 182, for other states.

43 “The American Jurist,” North American Reciew, XXIX (October, 1829), 422.

44 Abel P. Upshur, A Brief Enquiry into the True Nature and Character of Our Federal Government: Being a Review of Judge Story's Commentaries on the Constitution of the United States, 83.

45 Goebel, Antecedents, I, 475–509; U.S. Statutes at Large, I, 78–80.

46 Newmyer, R. Kent, The Supreme Court Under Marshall and Taney (New York, 1968), 18–55.Google Scholar

47 Providence Journal, as quoted in Niles' Weekly Register, December 3, 1825.

48 “Debtor-Creditor Laws of Alabama,’ Hunt's Merchants' Magazine, VI ( February, 1842), 156.

49 U.S. Statutes at Large, I, 80.

50 Warren, Charles, “Legislative and Judicial Attacks on the Supreme Court of the United States: A History of the Twenty-Fifth Section of the Judiciary Act,” The American Law Review, XLVII (January-April, 1913), 1–161.Google Scholar

51 Martin v. Hunter's Lessee, 1 Wheaton 304 (1816); Cohens v. Virginia, 6 Wheaton 264 (1821); Ableman v. Booth, 21 Howard 506 (1859).

52 Frankfurter, Felix and Landis, James M., The Business of the Supreme Court: A Study in the Federal Judicial System (New York, 1928), 4–56.Google Scholar

53 Stickles, Arndt M., The Critical Court Struggle in Kentucky, 1819–1829 (Bloomington, 1929) 1–26Google Scholar; Gates, Paul W., “Tenants of the Log Cabin,” Mississippi Valley Historical Review, XLIX (June, 1962), 3–31.CrossRefGoogle Scholar

54 Warren, Charles, The Supreme Court of the United States in United States History (3 vols., Boston, 1923), II, 93–111.Google Scholar

55 10 Wheaton 46–47 (1825).

56 Ibid., 50–51.

57 2 Wheaton 75 (1817); Payson v. Coolidge 19 Fed. Cases 19 (CCD Mass., 1814).

58 2 Wheaton 75.

59 Ibid., 72.

60 Ibid., 75.

61 Ibid., 73.

62 Townsley v. Sumrall, 2 Peters 182 (1829).

63 16 Peters 1 (1842); for a discussion of antecedents and the decision itself in its business and legal context see Freyer, “Unity from Diversity,” 1–173.

64 Swift v. Tyson, 16 Peters 18 (1842).

65 Ibid., 20.

66 Hurst, James Willard, The Legitimacy of the Business Corporation in the Law of the United States, 1780–1970 (Charlottesville, 1974), 1–40.Google Scholar

67 See Freyer, “Unity from Diversity,” 100–108, 195–228.

68 Dunne, Gerald T., Justice Joseph Story and the Rise of the Supreme Court (New York, 1968), 101Google Scholar; for more on admiralty jurisdiction, see: Deutsch, Eberhard, “Development of the Theory of Admiralty Jurisdiction in the United States,” Tulane Law Review, XXXV (1960), 75–106Google Scholar; Friendly, Henry, “From Judicial Grant to Legislative Power: The Admiralty Clause in the Nineteenth Century,” Harvard Law Review, LXVII (1954), 325–363Google Scholar; Kinvin Wroth, L., “The Massachusetts Vice Admiralty Court and the Federal Admiralty Jurisdiction,” American Journal of Legal History, VI (1966), 205–232.Google Scholar

69 See Freyer, “Unity from Diversity,” 1–173, for cases and a fuller discussion of the role of the federal courts.