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PRACTICAL SUGGESTIONS ON CODI- (1-A FYING THE LAW OF WARE

HOUSE RECEIPTS

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PRACTICAL SUGGESTIONS ON CODIFYING THE LAW

OF WAREHOUSE RECEIPTS.*

F one hundred and sixty national commercial organizations

in the United States, the American Bankers' Association and the American Warehousemen's Association have manifested the deepest interest and coöperation in improving the commercial law and making it uniform. It will be superfluous to discuss the wisdom of and necessity for codifying the law of warehouse receipts and making that law uniform throughout the United States, because the American Warehousemen's Association has already placed itself on record on these questions and appropriated fifteen hundred dollars and The Conference of Commissioners on Uniform State Laws has employed Mr. Barry Mohun of the Washington bar and Professor Samuel Williston of Harvard Law School to do the work. It remains to make a few practical suggestions on framing and perfecting this code.

The proposed code governing warehouse receipts is a commercial code and therefore ought to be based on the mercantile rather than the legal view, where a conflict exists. A brief sketch of the growth of mercantile law may aid in a solution of this question, England, from whom we derive our traditions, is and always has been a commercial nation. King Alfred, who reigned at the end of the ninth century, passed laws permitting foreign merchants to visit his kingdom for purposes of trade during the great fairs. The Norman Kings made unfulfilled promises to their subjects that King Edward's Code of Saxon law should receive the royal sanction, and about the year eleven hundred Henry the First granted a charter of liberties. On June 15, 1215, King John signed Magna Charta, which guaranteed a right to international trade as follows: “All merchants shall have safety and security in coming into England, and going out of England, and in staying and travelling through England, as well by land as by water, to buy and sell, without any unjust exactions, according to ancient and right customs.” To the consistent fulfillment of this declaration, England owes her commercial supremacy for seven hundred years. The foreign merchants added to these "ancient and right customs” commercial usages of the continent on many subjects. The merchants at each great fair instituted a Court Pepoudrous, or Dusty-foot Court, so called, because disputes were there settled as quickly as "the dust fell from the feet," and there administered justice according to these customs. By the beginning of the seventeenth century the custom of merchants was admitted as evidence in the courts in cases of trade contracts, and by the middle of the eighteenth century business had so increased that the usages of merchants were recognized in courts as part of the common law. The struggle was a long one; foreign bills of exchange first received judicial sanction; domestic bills next fell under judicial sway, but promissory notes were slow to find a place in the law.' Lord Chief Justice Holt, in the year seventeen hundred and three, ruled in the case of Clerke v. Martin' that a promissory note was not negotiable, and declared that the merchants were endeavoring to set the law of Lombard Street above the law of Westminster Hall. The merchants, however, successfully appealed to Parliament, and Lombard Street did make law for Westminster Hall. This act was passed in the year seventeen hundred and four, and is known as the statute of 3 and 4 Anne, chapter nine, and has been reënacted in most of the American States.

*An address delivered before the American Warehousemen's Association, at Washington, D. C., December 8, 1904, by Francis B. James, of the Cincinnati Bar, Chairman of the Committee on Commercial Law of the Conference of Commissioners on Uniform State Laws.

Mercantile usages as to checks, bonds, certificates of stock, scrip, warehouse receipts and bills of lading have found judicial recognition. Mercantile usages as to the relation of partners, principal and agent, bailor and bailee and other commercial transactions have also received judicial approval.

Many judges of many courts have at times refused to recognize mercantile usages in their purity, and declined to give them full force. The Supreme Court of Massachusetts, on the third day of April, 1883, in the case of Hallgarten v. Oldham," declared that a warehouse receipt issued by the owner of a private warehouse to a third person by name and not to his order and by him assigned did not transfer title. Mr. Justice Oliver Wendell Holmes, in deciding that case said: “The appeal to commercial usage cannot help the plaintiff's case. If there be any usage to treat such documents as this as symbols of property in the sense of the argument of the plaintiffs, it is simply a usage to disregard well settled rules of law affecting the rights of third persons."

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The merchants gave to the law their customs and usages. The courts have been slow, at times, to give these customs and usages the full force of law. Now, however, that our legislative bodies are to give back to the merchants codes of mercantile law, these codes should so far as possible embody these customs and usages, freed from legal jargon and unhampered by mere legal rules except such as are based on ethical principles underlying all American Jurisprudence, and principles of economics underlying sound and sane commerce.

In 1775, and repeated in 1793 in the celebrated case of Waugh v. Carver, the English courts held that the mere receipt of a percentage of profits made one a partner, and this remained the law of England until overthrown by the House of Lords in 1863. For a period of eighty-three years English lawyers evaded the effect of this decision by providing not for a receipt of a percentage of the profits but for a receipt of an amount equal to a percentage of the profits. This was mere legal jargon.

A mercantile code should be a clear expression of well recognized commercial customs whether they have or have not yet found their place in judicial decisions. The merchants gave to the law their customs and the law should give their customs back to them clearly expressed and freed from mere technical expressions. Whenever there is a conflict between mercantile usages and legal expressions, legal expressions should give way to mercantile usages embodied as rules of law.

Sir Courtney Ilbert in his work on "Legislative Methods" (at page 247) gives the following excellent advice: "The language of a Bill should be precise, but not too technical. An Act of Parliament has to be interpreted, in cases of difficulty, by legal experts, but it must be passed by laymen, be administered by laymen, and operates on laymen. Therefore it should be expressed in language intelligible to the lay folk. In some cases the compromise between popular and technical language may be effected by means of a definition. But definitions are dangerous and should be sparingly used."

A commercial code should consist in part of a statement of general principles governing usual cases which arise in practice. The great object of a code is certainty. The most bitter opponents of codification concede that mercantile law should be codified for the sake of certainty of the rule. Therefore, a code should not consist of a mere statement of general principles leaving its application entirely in the discretion of a judge. The French Codes, for this reason, are not models to be followed. Nor on the other hand

32 H. Bl. 235.

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