In the study of the English law of negotiable instruments, the case of Burton v. Davy (1437) has received far more attention than it deserves.[1]  Since the early 20th century, Burton has been viewed as a crucial piece of evidence by those who seek the ancestry of modern principles of negotiability in the legal records of medieval England.  In 1938, Frederick K. Beutel went so far as to say that he had found in Burton the “the complete development of the negotiable bill of exchange.”[2]  More recently, J.H. Munro has tempered this position, arguing that although Burton may not have established the full theory of modern negotiability, it remains a “landmark case,” providing “the true legal precedent in laying its foundations.”[3]

The notion of Burton as “precedent” should be taken with a grain of salt.  The rulings of the London mayor’s court in the fifteenth century may not necessarily have served as binding on its own future decisions, let alone those of the central royal courts. However, Burton could, as an individual example rather than as conclusive evidence, help establish whether principles of negotiability were generally accepted in English merchant courts before they were accepted in the central royal courts.  The merchant courts’ position on negotiability is crucial to the debate over whether a medieval “law merchant,” substantially different from the common law, was “incorporated” into the common-law courts in later centuries—a view recently (and sharply) critiqued by James Steven Rogers.[4]  Viewed in this light, Burton provides little evidence that the merchant courts of the fifteenth century recognized any principles resembling the modern rules of negotiability.  At most, and this much is uncertain, it indicates that merchant courts may have been willing to tolerate the assignment of debts to independent parties.  As a result, those interested in defending the “incorporation” thesis should look beyond Burton for their evidence.

Burton was litigated in a merchant court, held in the Guildhall of London before the mayor and aldermen; the case survives only because an account of the proceedings was returned along with a writ of certiorari to the Chancery.[5]  The facts that gave rise to the litigation are relatively simple.  In December of 1435, John Audeley, the Bruges factor of the London merchant Elias Davy, received money from Thomas Hanworth, the agent of the Norwich merchant John Burton.  Audeley drew for Hanworth a bill of exchange, promising that Davy would repay £30 to Burton or to “the bearer of this letter” the next March.[6]  Between December and March, the bill found its way into the hands of a London merchant named John Walden, who presented it for payment to Davy and was refused.  In August, Walden brought suit in Burton’s name to compel the payment. Judgment was eventually rendered in favor of the plaintiff, who had been “held and reputed in the place of the said supplicant [i.e., Burton] in this case according to the law merchant, etc.,” and Davy was ordered to pay the £30 as well as 20s. damages.[7]  To Munro, this decision made the London mayor’s court “the first English court to confirm and bestow . . . full protection of the legal rights of the bearer in a transferable bill,” allowing any bearer of a bill of exchange to pursue a defaulting debtor for full compensation.[8]

Thus baldly stated, Munro’s claim is clearly false.  The legal rights in a transferable bill of the holder in due course, at least in the modern understanding of negotiability, include the immunity to certain defenses that might have been available to the original obligee—the bill itself creates the source of the obligation, and not the debt for which the bill was originally created.  Burton provides no evidence that such a doctrine held currency in the London mayor’s court; in fact, it provides positive evidence of the contrary.  There is no mention of acceptance of the bill by Davy, nor of his undertaking to pay the bill or assuming an obligation to do so; rather, what the parties are disputing is the underlying debt.[9]  Under questioning, Davy admits that Audeley was his agent at the time that he took up the £30, that he did so on his principal’s behalf, and that the goods that Audeley had purchased with the £30 came into his own possession.[10]  The court also obtains the oaths of Audeley and Hanworth as well as “numerous kinds of proofs” to establish the facts of the exchange transaction.[11]  Yet the bill itself is almost ignored by the court’s fact-finding process, and none of the parties seem to have a concept of what Rogers terms “independent liabilities on the instrument.”[12]

Thus, the action in Burton is not an action on the bill, but on the debt.  Even if Walden were an independent transferee, he was still required to prove the existence of the underlying obligation.[13]  In fact, the economic historian M. M. Postan holds that it was “essential” to early bills of exchange that “the debt, or the loan, should be in a sense pre-existing”—meaning that bills of exchange were no more negotiable in this period than any other informal instrument.[14]  Because Burton failed to resolve whether a holder in due course could acquire a better title to the bill than the person from whom he obtained it, it cannot be seen as establishing full protections for the legal rights of the bearer.[15]  In fact, it demonstrates that these protections were not respected by the court of the mayor and aldermen in the mid-fifteenth century—for if they had, Walden would assuredly have appealed to them rather than debate the underlying debt.

If one cannot find the full doctrine of negotiability in Burton, what did the case establish?  The answer to this question depends on the role of Walden as the “bearer.”  If Walden were an independent purchaser of the obligation, “held and reputed” in Burton’s place, the case may serve as evidence that the merchant courts accepted a more limited principle of negotiability, namely the assignability of debts.  However, this question raises grave dangers of misinterpretation; a statement that payment should be made to a specific individual or to “the bearer of this letter” did not necessarily mean that any bearer of the letter should be paid.  Rather, as Rogers asserts, it was a common device to allow the creditor’s representatives to collect the payment without a formal letter of attorney—the possession of the letter would itself be proof of agency.  If Rogers is right and Walden acted only “as a collection agent” for Burton, then no legal principle was established in the case, other than that debts should be paid to creditors or their representatives.[16]

Unfortunately, little is known about John Walden, his relationship with Burton, or the means by which he obtained the bill.[17]  If assignment of debts were a rare practice in the fifteenth century, then Walden would likely have been a collection agent; if it were common, there is a greater chance that he was an independent bearer.  Yet the evidence on the assignment of bills of exchange in the fifteenth century is inconclusive.  Postan provides many examples of the transfer of sealed bonds or the assignment of statutory recognizances, but the transfer of informal debts such as bills of exchange does not appear to have been nearly so frequent.[18]  Munro claims that the records of the Cely trading family show that “merchants of this era had no qualms about the legal rights of the bearer, in either bills-of-exchange or bills obligatory”; however, although the evidence from the Cely documents shows that there was a good deal of bearer paper, it does not show how broadly the term “bearer” was understood.[19]  Alison Hanham, in her study of the Cely family, notes that the practice of reselling bills of exchange at a discount “does not appear to have been common at the period.”[20] 

The case of Thonderle v. St. Clement (1305), cited by both Munro and William Searle Holdsworth to demonstrate the practice of transferring notes and bills, is equally problematic.[21]  The record of the London mayor’s court describes Reginald de Thonderle as having “bought” two bills from the merchant William Foundepe, which had been entrusted to Reymund de St. Clement for delivery to the plaintiff.  When he failed to deliver the bills, Reginald sued, and was ultimately successful.[22]  On the basis of this record, Munro concludes that “debt assignments were far from being a novelty in the mid-fourteenth century.”[23]  However, Thonderle seems incapable of supporting such an argument on its own.  First, both Munro and Holdsworth cite the translated record, and they place significant emphasis on the fact that Reginald had “bought” the bills from William.  However, it is perfectly possible that this English word has been used to describe a transaction in which Reginald simply paid William to draw two bills of exchange; Munro himself notes earlier in the same essay that Staple merchants in Flanders would use their Flemish funds to “buy” bills of exchange from merchants in Antwerp, which could be redeemed in London for English currency.[24]  Second, the structure of Thonderle v. St. Clement supports the view that it involves a simple exchange transaction, without any assignment of debt.  Reymund seems to be the agent of the plaintiff and had them drawn on the plaintiff’s behalf.[25]  The future redemption of the bills, involving the ultimate question of who owes what to whom, was never at issue.  The defendant was given bills in order to deliver them to the plaintiff, and he failed to do so; the case seems to represent nothing more than garden-variety detinue.

Even if the assignment of informal debts (with or without legal sanction) were a common practice in the fifteenth century, the text of Burton gives additional reason to believe that Walden is in some way Burton’s agent.  The record states that the “aforesaid supplicant”—i.e., Burton—“by the said John Walden, bearer of the letter aforesaid, . . . produced to the aforesaid Elias that letter”—Walden is the mechanism by which Burton’s case is pursued.[26]  The record also refers to Walden as “the bearer of this letter in the name of the supplicant,” which is hardly a statement of independence.[27]

Further evidence for this proposition can be found in the London Guildhall letter-books, a source surprisingly ignored by Rogers’ account.  An entry in the letter-books from 1436 discusses the early proceedings in Burton in response to a royal writ.[28]  The mayor’s reply clearly treats John Burton as the plaintiff in the suit.  Davy was ordered to appear “to answer John Burton, merchant,” who is said to have “complained by bill” concerning “a debt of £30 on a bill of exchange between the said John Burton and John Audeley, the factor and attorney of Elias aforesaid, executed at the town of Bruges and not yet paid.”  Munro describes the emphasis on Burton in the letter-book entry as “misleading,” but he provides no further comment to explain his judgment, nor does he offer any motive for the London court to lie or to conceal the nature of the suit in its answer to this writ—even if Walden had been admitted through a relatively novel procedure.[29]  Indeed, this reply indicates that the London court saw Burton as an unremarkable action between a creditor and debtor.  The writ of certiorari given in Select Cases similarly viewed the controversy as between “John Burton of the city of Norwich, merchant, and Elias Davy of London, merchant.”[30]

The assessment of Beutel, that the law of negotiable instruments emerged from Burton v. Davy like Athena stepping full-grown from the head of Zeus, is clearly untenable.  To be fair, Munro does not attempt to advance it, and states that the developments leading to “true negotiability” took place in the Low Countries rather than in England.[31]  However, he does hold that Burton established “the basic legal foundations of the bearer’s rights in a transferable bill,” and that after Burton, “no English law-merchant court, or any other court”—even on the continent—“subsequently denied the right of the unnamed bearer of a bill of exchange to sue the acceptor . . . , or even the drawer, for payment and damages.”[32]

It is in his arguments regarding continental courts that Munro seems on his strongest ground.  Rogers pays very little attention to the continent in his treatise, and the merchant courts of northern Germany and the Low Countries may well have established protections for the independent bearer or even full-fledged principles of negotiability.  If so, Rogers’ argument that the continental lawyers (whom he sees as indistinguishable from the civilians) had no better understanding of negotiable instruments than did the common lawyers would be greatly weakened.[33]

However, such an interpretation calls into question why Burton must be viewed as the linchpin, especially given how tenuous an example it appears.  If independent bearers were indeed protected in every case after Burton, then scholars could easily take the first unambiguous post-Burton example and declare it the “landmark case” on which attention should be showered.[34]  As it is, Munro attempts to have it both ways, calling Burton a “vital precedent” at the same time that he admits that “the circumstances involving true negotiability were indeed very different in the Low Countries,” such that “one cannot claim to make a Flemish silk purse out of an English sow’s ear, so to speak.”  In that case, there is no reason to spill quite so much ink over Burton v. Davy.  Burton is at best an ambivalent advocate for the rights of the independent bearer, providing weak evidence for assignability and no evidence at all (indeed, counter-evidence) for the doctrine of the “holder in due course.”  No matter how strong a statement of negotiability Burton might offer, it is only a single case, and cannot be assumed without further evidence to be representative of the principles of a “law merchant.”[35]  With such uncertain support from Burton, historians should consider calling an end to this debate, and should refocus their efforts on sources more likely to yield concrete results.

Works Consulted

Beutel, Frederick K., "The Development of Negotiable Instruments in Early English Law," 51 Harvard Law Review 813 (1938).

Select Cases Concerning the Law Merchant 3, ed. Hubert Hall, Selden Society 49 (London:  Bernard Quaritch, 1932).

Calendar of Plea and Memoranda Rolls Preserved Among the Archives of the Corporation of the City of London at the Guildhall, 6 vols., ed. A.H. Thomas (Cambridge U.P., 1926-61).

Calendar of Letter-Books Preserved Among the Archives of the Corporation of the City of London at the Guildhall, 11 vols., ed. Reginald R. Sharpe (London:  John Francis, 1899).

Hanham, Alison, The Celys and Their World (Cambridge:  University Press, 1985).

Holden, J. Milnes, The History of Negotiable Instruments in English Law (London:  Athlone Press, 1955).

Holdsworth, William Searle, A History of English Law, 1st ed., 9 vols. (London:  Methuen, 1925).

Munro, J.H., "English 'Backwardness' and Financial Innovations in Commerce with the Low Countries, 14th to 16th Centuries," International Trade in the Low Countries, ed. Peter Stabel, Bruno Blondé, and Anke Greve, Studies in Urban Social Economic and Political History of the Medieval and Early Modern Low Countries 10 (Leuven-Apeldoorn:  Garant, 2000), 105-67.

--------, "The Origins of the Modern Financial Revolution," Working Paper No. 2 (2001), available online at http://www.economics.utoronto.ca/ecipa/archive/UT-ECIPA-MUNRO-01-02.html (last viewed May 2, 2002).

North, Michael, "Banking and Credit in Northern Germany in the Fifteenth and Sixteenth Centuries," From the North Sea to the Baltic (Brookfield, Vt.:  Variorum, 1996), sec. IX, 811-826.

Postan, M. M., "Private Financial Instruments in Medieval England" (1930), rpt. in Medieval Trade and Finance (Cambridge:  University Press, 1973), 28-64.

Rogers, James Steven, The Early History of the Law of Bills and Notes, Cambridge Studies in English Legal History (Cambridge:  University Press, 1995).

Usher, Abbot Payson, Early History of Deposit Banking in Medieval Europe, Harvard Economic Studies 75 (Cambridge, Mass:  Harvard University Press, 1943).

Y.B. Trin. 6 Ric. II (Ames Foundation, 1996).

Notes

[1] Although Burton has traditionally been given the date of 1437, most of the litigation actually took place in 1436, as will be seen below.

[2] Frederick K. Beutel, “The Development of Negotiable Instruments in Early English Law,” 51 Harvard Law Review 813, 831 (1938).

[3] J.H. Munro, “The Origins of the Modern Financial Revolution,” Working Paper No. 2 (2001), available online at http://www.economics.utoronto.ca/ecipa/archive/UT-ECIPA-MUNRO-01-02.html (last viewed May 2, 2002), 46.  See also J.H. Munro, “English ‘Backwardness’ and Financial Innovations in Commerce with the Low Countries, 14th to 16th Centuries,” International Trade in the Low Countries, ed. Peter Stabel, Bruno Blondé, and Anke Greve, Studies in Urban Social Economic and Political History of the Medieval and Early Modern Low Countries 10 (Leuven-Apeldoorn:  Garant, 2000), 105-67.

[4] James Steven Rogers, The Early History of the Law of Bills and Notes, Cambridge Studies in English Legal History (Cambridge:  University Press, 1995).

[5] “Burton v. Davy,” Select Cases Concerning the Law Merchant 3, ed. Hubert Hall, Selden Society 49 (London:  Bernard Quaritch, 1932), 117-119.  The fate of the parties in the Chancery (or perhaps in King’s Bench, which may have heard appeals as a court of error for the London municipal court) is unknown.

[6] The full text of the bill, as set out in Select Cases, is as follows:

To the very honoured master Elias Davy, mercer, at London, let this be given:  Very honoured sir, please it you to know that I have received here of John Burton, by exchange, £30 payable at London to the aforesaid John or to the bearer of this letter of payment on the fourteenth day of March next coming, by this my first and second letter of payment.  And I pray you that it may be well paid at the day.  Written at Bruges, the tenth day of December, by your attorney John Audeley, etc. (117)

The initial payment was likely made in Flemish money rather than in English pounds; moreover, it is unlikely that the amount was the exact equivalent of £30, as loans of this kind would often incorporate interest into the exchange rate.

[7] Select Cases, 118-119.  The suit was interrupted by an unusual sequence of events involving two royal writs.  The record sent to the Chancery and reported in Select Cases states that Davy appeared before the London court on Sept. 1, 1436 and asked for a delay to consider the charge against him.  His request was denied, and the parties were ordered to return “after the Morrow of All Souls then next following [i.e., after Nov. 3]” (118).  The record states that “in the meantime . . . the lord King . . . ordered . . . the mayor [etc.] . . . that they should have the cause of the aforesaid debt . . . before his justices at Westminster on Friday then next following” (118, all ellipses in original).  The mayor and aldermen returned the writ with a spirited defense of the jurisdictional privileges of merchants and of the ancient city of London, and after “these evidences were ... inspected and the reasonings of the parties aforesaid likewise heard before the above-named justices,” another royal writ remitted the case back to the London court before its next proceeding on Nov. 29 (119).  This record implies that the case was heard by the justices of one of the central royal courts (likely King’s Bench), but that the justices then declined to rule on it.

However, the letter-books of the Guildhall of London provide a somewhat different story.  According to a letter-book entry from 1436, a writ was sent on Nov. 3, 1436 ordering the London court to describe the particulars of the debt, “to the intent that the said Elias [Davy] might be prevented from prosecuting an action in the King’s Bench at Westminster against William Clerk, skinner, for the recovery of a debt of £20” (Calendar of Letter-Books Preserved Among the Archives of the Corporation of the City of London at the Guildhall, 11 vols., ed. Reginald R. Sharpe (London:  John Francis, 1899-), 208).  No explanation was given of the litigation between Davy and Clerk or the circumstances that had led to the request; Hall speculates that Clerk might have been maintaining Burton so as to interfere with Davy’s suit against him.  The reply from the mayor and aldermen described Burton briefly, and it was answered by a second writ of Nov. 23, 1436, “remitting the above suit to them to be tried according to the law merchant and the custom of the City” (Ibid.).

[8] Munro, “Backwardness,” 145.  In this, he follows J. Milnes Holden, who had called Burton “truly remarkable” and one of the earliest recorded examples in which “the bearer’s right to sue was clearly recognised” (The History of Negotiable Instruments in English Law (London:  Athlone Press, 1955), 24).

[9] Rogers, 47.

[10] Select Cases, 119.  The latter fact should have been entirely irrelevant to the case; Audeley’s status as Davy’s agent had already been established.  It is possible, however, that the purchase of the goods was relevant to Davy’s suit against Clerk.

[11] Select Cases, 119.

[12] Rogers, 47. Munro fundamentally misunderstands this objection.  He first disparages Rogers’ point on acceptance as “an illogical cavil,” saying that under contemporary mercantile custom, “neither the designated payee nor the bearer/holder of the note could possibly have presented a bill for redemption unless it had already been ‘accepted,’ with those words customarily written on the bill’s dorso” (“Backwardness,” 148).  It is difficult to discern Munro’s meaning here.  A bill must be accepted by the drawee, and that cannot possibly happen until it is presented to him or her, for acceptance if not for final payment.  Munro then goes on to say that the bill in this case must have been accepted, because a “dishonoured” bill is “by definition” one that had been accepted but not redeemed by the designated drawee (Ibid., 148-149). Yet this seems to force a square medieval peg into a round modern hole.  The record never describes the bill as “dishonoured,” let alone in the modern sense of the term; Davy “denied and refused” to pay after being shown the letter, but he never undertakes to pay, which is the essence of the concept of acceptance (Select Cases, 118).  Finally, Munro argues that “no medieval Law Merchant court would have agreed to hear any case involving a disputed bill-of-exchange that did not contain the words ‘accepted’ on the dorso, to provide concrete evidence of financial liability” (“Backwardness,” 119).  However, he offers no evidence whatsoever to support this claim, and it is doubtful whether any exists.

[13] Munro describes this argument as “nitpicking,” and says it “could not have arisen in this particular suit” (“Backwardness,” 150, note 103). However, it did arise—most of the evidence presented was with regard to the underlying obligation, not the mere existence and veracity of the bill.  Part of the requirement of negotiability is that the instrument itself constitute the obligation; if the transferee can be deprived of a judgment because the debt was paid to the original creditor, then what confidence can one have in purchasing a bill?

[14] M. M. Postan, “Private Financial Instruments in Medieval England” (1930), rpt. in Medieval Trade and Finance (Cambridge:  University Press, 1973), 56, 59-60.

[15] Cf. Holden, who qualifies his assessment by saying that “until this principle was clearly established, the doctrine of negotiability could not be said to exist” (Holden 63).

[16] Rogers, 47.  This was also Usher’s interpretation of English law:  “Agents and bearers as agents were given extensive privileges, but the jurists were unwilling to recognize that an assignee was in fact a new principal, least of all in respect of short term obligations” (94-95).

[17] A London merchant of the same name appears in the mayor’s court records as an alderman and sheriff in 1454 and 1455, but this may represent another individual entirely.  See Calendar of Plea and Memoranda Rolls Preserved Among the Archives of the Corporation of the City of London at the Guildhall, 6 vols., ed. A. H. Thomas (Cambridge:  University Press, 1926-61), iii,144-145, 149.

[18] Postan, 40-43.

[19] Munro, “Backwardness,” 150.

[20] Alison Hanham, The Celys and Their World (Cambridge:  University Press, 1985), 191.

[21] See Munro, “Backwardness,” 141; William Searle Holdsworth, A History of English Law, 1st ed., 9 vols. (London:  Methuen, 1925), viii, 116.

[22] Calendar of Early Mayor’s Court Rolls, ed. A.H. Thomas (Cambridge:  University Press, 1924), 172.  The case was heard on March 27, 1305, in the court of the mayor J. le Blound.  The full record is as follows:

Reymund de St Clement was summoned to answer Reginald de Thonderle in a plea that he restore to him two bills of £70 15s 11d, which the plaintiff bought from William Foundepe, merchant, and which the said William entrusted to the custody of the defendant for delivery to the plaintiff.  Reymund admitted receipt and detinue of the bills, and said he was willing to give them up, if the plaintiff would pay a debt of 15s 11d, and undertake to acquit him as regards the above William.  The plaintiff admitted the debt.  Judgment that he pay Reymund and Reymund give him the bills.

[23] Munro, “Backwardness,” 141, n. 86.

[24] Munro, “Backwardness,” 117.  He later describes Thomas Hanworth, the factor of John Burton and the deliverer of the bill at issue in Burton, as “purchasing” a bill from John Audley (Ibid., 145).  There is no indication in the text of this record that the plaintiff was the purchaser or assignee of an existing bill of exchange rather than the deliverer and payee of a new bill.

[25] This interpretation best explains the strange coincidence between the value of the bills and the debt the plaintiff owed to the defendant (£70 15s 11d and 15s 11d, respectively), as well as the demand that the plaintiff “acquit [the defendant] as regards the above William.”  Reginald had Reymund act in his name as deliverer for the bills, but failed to reimburse him fully for doing so, leaving Reymund 15s 11d in debt to William.

[26] Select Cases, 118.

[27] Ibid., 119.

[28] Calendar of Letter-Books, 208; see above, note 7.

[29] Munro, “Backwardness,” 145, note 93.

[30] Select Cases, 117.  Munro regards this line of argument as a mere “cavil”; after all, the court had ruled that Walden was “held, reputed, and admitted in place of” Burton, and had ordered Davy to pay the stipulated sum to “the before-mentioned supplicant or to John Walden, the bearer of the same letter (who is held and reputed in his place in this case . . . )” (Ibid., 118-9).  However, such an interpretation places far too much emphasis on the court’s determination of Walden’s status, which was not declared in a separate ruling but was only mentioned in passing (albeit repeatedly).  Moreover, Munro never answers Rogers’ powerful argument that Davy was left free to pay the supplicant (Burton) or the bearer of the letter—the fact that he could still pay Burton alone militates strongly against the idea that Walden is suing solely on his own behalf.  Munro does attempt to argue that Burton’s name was added only as surplusage, and that the name was “necessarily” required when “there were not yet any legal precedents to establish the independent rights of the bearer” (Munro, “Backwardness,” 150, note 103) (emphasis added).  This is also the explanation given by Holden, who says that Walden didn’t bring the case in his own name because “(to the bearer’s knowledge) no such action had previously succeeded”; thus, “on grounds of caution, it was decided to make the payee the ‘supplicant’“ (Holden 24).  However, this is a rather thin thread, especially when the collection-agent hypothesis is reasonably strong, and there is no clear explanation for why the London court needed to be so timid in its approach.

[31] Munro, “Backwardness” 148.

[32] Munro, “Origins,” 46.

[33] See Rogers, 151-169.

[34] Munro, “Origins,” 46.  Indeed, in his introduction, Thomas describes a case before the London merchant court in 1414, in which Richard of Ikelington sued on a bill of exchange which he had acquired after it passed through a number of other hands.  This record is unfortunately unpublished, it remains for scholars to analyze the original and determine whether an independent bearer was indeed allowed to bring suit in his own name (Calendar of Plea and Memoranda Rolls, xxxix).

[35] Occasional cases can even be found in the central royal courts that arguably provide evidence for assignability, even though the principle was not officially accepted there.  Cf. Garrington v. Simonel (Y.B. Trin. 6 Ric. II, pl. 3 (Ames Foundation, 1996), 8-11), where a plaintiff other than the original creditor is allowed a jury on a writ of debt.