Treat v. Cooper

The opinion of the Court was drawn up by Whitman C. J. — The question submitted is, were the notes declared on negotiable ? and this depends upon the effect of a writing indorsed on each of them. The writing on one is, “ the contents of this note are to be appropriated to the payment of R. M. N. Smyth’s mortgage to William & Jeremiah Coburnthey being the original promisees in that note; on the other, it is in the same form, but to a different payee, and to the holder of a different mortgage from said Smyth. The notes, upon their face, purport to be for the payment of money absolutely, in one and two years from their dates, with interest annually ; and the promise in each is to the payee, or to the order of each respectively. Upon what principle can the writings on the back of each of the notes be considered as in restraint of their negotiability ? Can they be considered as making the notes conditional ? Or did they amount to nothing more than a designation of what was to be done with the money, when received by the payees ? If the notes were not intended to be paid absolutely, but only in case of their being needed to discharge the mortgages, would they not have been so expressed, and with a proviso to that effect ? and not have been left to an inference, to say the least of it, very obscurely and inartificially indicated, if indicated at all ? If the mortgages were otherwise discharged as the case shows they were, is it reasonable that the agreement between the parties should be understood to be, that the notes were not to be paid ? Neither in the statement of the case, nor in the arguments of counsel, is it intimated, that it was [206] ever understood, that the notes were not intended to be absolutely payable to the promisees; and, from the face of the notes themselves, we think it must be believed the parties understood it to be their agreement, that they should be so. If it were not so intended, why were the words, “ or order,” inserted, as is usual in notes intended to be absolutely payable and negotiable ? and would those words have been inserted if it had been otherwise designed and intended ? The object of the parties was, manifestly, that the money, when received for the notes, should go in discharge of the mortgages, if then uncancelled; and in that event to be a discharge thereof pro tanto. And, in such case, the agreement by the payees, by accepting the notes with the memorandums on them, would have secured the giving of credit accordingly. But, in the forms in which these appear, we cannot hesitate to come to the conclusion, that it must have been intended, that the payees should have a right to avail themselves of the money promised, from the promisor's, if they should have occasion therefor, indirectly through indorsees. It could make no difference to the payers whether it was so received or not. The destination and object of the payment would be the same in either case; and equally well adapted to answer the purpose of the payers. We cannot, therefore, come to any other result, than that the negotiability of the notes was not affected, or intended to be affected by the writings on the back of them. And the action must, according to the agreement of the parties, stand for trial upon other grounds of defence, if any there be.