the surtax, emphasis is placed upon the special rate applicable to the comparatively few sales of mines and oil or gas wells, while a statement of the regular surtaxes, in which everyone is interested, follows in a subordinate position. An attempt is frequently made, in connection with one subject, to sketch the outlines of a related subject which is fully covered elsewhere, when space could be saved and accuracy of statement enhanced by recourse to cross references.

In short, it is believed that the mechanics of the book might be improved if Mr. Holmes, who will probably never have the time to do it himself, could find an industrious editor with an analytical, orderly mind. As for the substance of the book, as has been intimated, practically everything is there. On the merits, therefore, the case may be dismissed with the statement that no lawyer who has more than infrequent occasion to consider problems of federal tax liability should or would be without Holmes. HUGH SATTERLEE.

SUPPLEMENT TO CASES UNDER THE INTERSTATE COMMERCE ACT. Edited by Felix Frankfurter. Cambridge: Harvard University Press. 791-984.

1925. pp.

This Supplement to the collection of cases which appeared in its second edition in 1922 has a twofold value. It presents in form convenient to the student of law and the practising lawyer alike the recent decisions of the Supreme Court interpreting the Transportation Act of 1920. It also contains a complete index to both the second edition and the Supplement, and presents a most complete bibliography of legal literature on all phases of railroad regulation appearing in law reviews during the past fifteen years. This last feature is of sufficient importance to make the Supplement of value to every lawyer who has concern with any phase of the law relating to common carriers.

Practically all of the Supreme Court decisions relating to the subjectmatter which have appeared since the second edition was issued, are included in this Supplement. These decisions indicate the well-recognized policy of the Court to uphold the basic principles of the Transportation Act of 1920 as proper regulations of interstate commerce, made necessary in order to ensure adequate transportation, as the Act declares, "in the interest of the commerce of the United States considered as a whole." These decisions are important not only to the law student; they also form excellent laboratory material for students of political science and for economists who are interested in transportation problems.

Railroad regulation in the United States is today on trial as it has never been before. The concept entertained in some quarters that the Interstate Commerce Commission should be made up of representatives of industrial groups or geographical sections of the country, rather than of impartial administrators of a technical industry, coupled with a marked tendency on the part of Congress to interfere with the technical details of regulation, threaten to change our entire system of control. Whether or not the transportation systems are able successfully to bear the burdens which would be cast upon them by these changes, or how far these changes will be permitted to go, remains to be seen. Certainly these matters should be subjected to thorough consideration in all well-informed quarters. The present Supplement gives an excellent insight into the scope and nature of existing regulation and of the problems with which the Interstate Commerce Commission as an administrative tribunal has been dealing in a quasi-judicial capacity.

KENNETH F. BURGESS.

HARVARD

LAW REVIEW

VOL. XXXVIII

MAY, 1925

No. 7

RIGHTS OF HOLDER OF BILL OF EXCHANGE AGAINST THE DRAWEE

IF THE question were put to the average layman whether the holder of a check, to take the most common instance of a bill of exchange, had any effective rights against the drawee bank, it is believed that the almost universal response would be to the effect that of course the holder may insist upon payment by the bank, if there are funds on deposit to cover the amount. And if the same question were propounded to the average lawyer, the reply generally would be at least if the lawyer had in mind the provisions of the Uniform Negotiable Instruments Lawthat the holder had no rights against the bank. It is the purpose of this paper to inquire into the accuracy of these two views.

Orders drawn on particular funds are generally construed as assignments in whole or in part, as the case may be, of the designated fund,1 and it would naturally follow that the assignee would

1 Row v. Dawson, 1 Ves. 331 (1749); Christmas v. Russell, 14 Wall. (U. S.) 69 (1871); Fourth Street Nat. Bank v. Yardley, 165 U. S. 634 (1897); Curry v. Shelby, 90 Ala. 277, 7 So. 922 (1890); Pope v. Huth, 14 Cal. 403 (1859); Walton v. Horkan, 112 Ga. 814, 38 S. E. 105 (1900); Brill v. Tuttle, 81 N. Y. 454 (1880); Kingman v. Perkins, 105 Mass. III (1870); Binns v. Slingerland, 55 N. J. Eq. 55, 36 Atl. 277 (1896). Many other cases are cited in 2 AM. & ENG. ENC. L., 2 ed., 1059-1061, and in 5 C. J. 922-926. See Tallman v. Hoey, 89 N. Y. 537 (1882), representative of the view that valuable consideration must appear to have been given, to make the case one of equitable assignment.

There is perhaps more reluctance to recognize an order for part of a particular fund as an assignment. And there are of course problems of administration and

have his appropriate remedies, whatever they may be, against the debtor. Such orders are not bills of exchange, which must be free of the conditional element. An instrument could not serve the primary functions of a bill of exchange if its honor depended upon the existence or sufficiency of a specified fund. The financial responsibility of the parties thereto, indeed, may be difficult to determine as a practical matter of business, but such difficulty is inherent in any system of exchange built upon credit. The existence and amount of a particular fund would involve inquiries quite out of place in commercial transactions regarding bills of exchange, if they are really to be circulable like money.3

That orders on designated funds are interpreted as assignments seems to be due largely, if not entirely, to the fact that they were objectionable as bills of exchange. In Row v. Dawson the question was whether the payees of an order had a preferred claim over other creditors of the drawer to a fund in the hands of a debtor of the latter. The "draft " was made on S, the deputy of W, "out of the money due to me from Horace Walpole out of the Exchequer." The drawer having become bankrupt, it was decreed that the payee was entitled to be paid out of the fund. The Lord Chancellor said:

5

"This demand, and the instrument under which the defendants claim, is not a bill of exchange, but a draft; not to pay generally, but out of his particular fund, which creates no personal demand: therefore not a draft on personal credit to go in the common course of nego

procedure in such situations not encountered in directions to pay the entire fund.

An order to pay a specified sum "out of any balance due us remaining in your hands" is one drawn on a particular fund. In re Hanna, 105 Fed. 587 (E. D. Pa., 1900).

2 What those remedies may be need not be considered here. To what extent the assignee may proceed at law, and what the proper procedure may be in case the assignment is partial, are problems outside the scope of this paper.

Though the instrument does not itself disclose that it is drawn upon a specific fund, such may still be the fact. Upon proof of such fact it may well be, within the principles hereinafter referred to, that the holder might be able to establish a position as assignee.

3 The Uniform Negotiable Instruments Law excludes from the class of negotiable instruments those documents payable out of a particular fund. See Section 3.

41 Ves. 331 (1749).

5 Hardwicke.

tiation, which is necessary to bills of exchange, by draft on the general credit of the person drawing, the drawee, and the indorser, without reference to any particular fund. . . . Then what is it, for it must amount to something? It is an agreement for valuable consideration before hand to lend money on the faith of being satisfied out of this fund; which makes it a very strong case. If this is not a bill of exchange, nor a proceeding on the personal credit of Swinburn or Gibson, it is a credit on this fund, and must amount to an assignment of so much of the debt: and though the law does not admit an assignment of a chose in action . . . this court does; and any words will do; no particular words being necessary thereto." "

7

If, however, the order is general, the well-nigh universal view has been that in the case of the ordinary bill of exchange the payee acquires no proprietary interest in the fund. The few cases holding the contrary view appear to have been rejected. But such general order in conjunction with other facts may well make out a case of assignment.

9

There is no prescribed expression or combination of facts requisite to the accomplishment of an assignment. It is a matter

6 At p. 332. A bill of exchange and an assignment would seem to be two essentially and fundamentally different things. The former, as its terms indicate, is an order directed to a party to pay a sum of money; the latter operates to vest in the assignee ownership, legal or equitable, of a fund, or part thereof, in the hands of another. In one case it was necessary for a court to reject a contention that since the drawee had funds in his hands belonging to the drawer the instrument was necessarily an assignment and not a bill of exchange. It was pointed out that bills usually are drawn on funds. Luff v. Pope, 5 Hill (N. Y.) 413 (1843). And it is not always easy to determine whether an instrument in question is a bill of exchange or assignment. See Windsor Cement Co. v. Thompson, 86 Conn. 511, 86 Atl. 1 (1913).

It is intended hereby to exclude checks, which, though bills of exchange, have some special features.

8 See the many cases cited in 5 C. J. 916, note 44.

Lord Chief Baron Eyre was mistaken when he said, in Gibson v. Minet, 1 H. Bl. 569, 602 (1791), that "The theory of a bill of exchange is, that the bill is an assignment to the payee of a debt due from the acceptor to the drawer, and that acceptance imports that the acceptor is a debtor to the drawer, at least has effects of the drawer's in his hands." In Wolfe v. Hart, 40 Nov. Sc. 17, 19 (1885), it is said: "The bill of exchange, which is a mere mercantile instrument in its origin, must remain a mere mercantile instrument and cannot be treated as conveying even equitably - the funds which are required to pay it."

9 Corser v. Craig, 1 Wash. 424, Fed. Cas. No. 3,255 (D. Pa., 1806) (See Christmas v. Russell, 14 Wall. (U. S.) 69 (1871)); Wheatley v. Strobe, 12 Cal. 92 (1859) (See Cashman v. Harrison, 90 Cal. 297, 27 Pac. 283 (1891)).

of intention to be gathered from the language used in and outside 10 the instrument and from the circumstances, the necessary intention being that the fund shall be appropriated." In Bank of Commerce v. Bogy 12 Judge Bliss said: “I have found no case where a mere bill, though negotiated for a good consideration, is held of itself, without regard to the intention of the drawer, to operate as an assignment of the debt or fund, or so much thereof as is covered by the bill. Nor have I seen a case where the courts have refused to carry into effect the intention of the parties in relation to such debt or fund." In each case the inquiry is whether an intention to transfer ownership in the fund in the hands of the debtor has been carried out so that thereafter the drawer-assignor has no further control over the fund, authority to collect, or power of revocation.13

The question being of the nature it is, it would obviously be futile to attempt any comprehensive statement as to what does or does not amount to an assignment. There are, however, certain factors which more or less earmark the transaction.

(1) If the order is for an amount which represents the precise sum due the drawer from the drawee, the courts appear to be quite ready to find that an assignment has been effected.1 In Mandeville v. Welch 15 Mr. Justice Story said:

In cases also where an order is drawn for the whole of a particular fund, it amounts to an equitable assignment of that fund, and after

12

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10 Risley v. Phenix Bank, 83 N. Y. 318 (1881); Wolfe v. Hart, 40 Nov. Sc. 17 (1885); Rinehart & Dennis Co. v. McArthur, 123 Va. 556, 96 S. E. 829 (1918). 11 Dickenson v. Phillips, 1 Barb. (N. Y.) 454 (1847); Kimball v. Donald, 20 Mo. 577 (1855); Skobis v. Ferge, 102 Wis. 122, 78 N. W. 426 (1899); Rinehart & Dennis Co. v. McArthur, supra; Venturi v. Silvio, 197 Ala. 607, 73 So. 45 (1916). 44 Mo. 13, 17 (1869). 13 Coates v. Bank, 91 N. Y. 20, 31 (1883). 14 Mandeville v. Welch, 5 Wheat. (U. S.) 277, 286 (1820); Moore v. Davis, 57 Mich. 251, 23 N. W. 800 (1886); Varley v. Sims, 100 Minn. 331, 111 N. W. 269 (1907) (check — gift causa mortis); Walker v. Mauro, 18 Mo. 564 (1853); M'Menomy v. Ferrers, 3 Johns. (N. Y.) 71 (1808); Throop Grain Cleaner Co. v. Smith, 110 N. Y. 83, 17 N. E. 671 (1888); Kahnweiler v. Anderson, 78 N. C. 133 (1878); Gardner v. Bank, 39 Ohio St. 600 (1883); Re Estate of Taylor, 154 Pa. St. 183, 25 Atl. 1061 (1893) (check-gift causa mortis); Lee v. Robinson, 15 R. I. 369, 5 Atl. 290 (1886). See also Weber v. Salisbury, 149 Ky. 327, 148 S. W. 34 (1912); Bank v. O'Byrne, 177 Ill. App. 473 (1913); Phinney v. State, 36 Wash. 236, 78 Pac. 927 (1904), all involving gifts of donors' checks. 155 Wheat. (U. S.) 277, 286 (1820).