White v. Cushing

Foster, J. The plaintiff sues as indorsee of an order signed by the defendant of the following tenor : "$120. Dover, Oct. 27th, 1893. Piscataquis Savings Bank. "Pay James Lawler, or order, one hundred and twenty dollars, and charge to my account on book No.- J. N. Cushing.” " W itness- "The bank book of the depositor must accompany this order.” The order was indorsed in blank on the back by James Lawler and Samuel Lewis, and the plaintiff claimed to recover against the defendant as upon a negotiable instrument. The real question presented is whether the instrument declared on is negotiable, so that an action may be maintained upon it in the name of the indorsee. To constitute a negotiable draft or order, it must be a written order from one party to another for the payment of a certain sum of money, and that absolutely, and without any contingency that would embarrass its circulation, to a third party or his order or bearer. It has often been held that a bill or note is not negotiable if made payable out of a particular fund. But there is a distinction between such instruments made payable out of a particular fund, and those that are simply chargeable to a particular account. In the latter case, the payment is not made to depend upon the adequacy of that fund, the only purpose being to inform the drawee as to his means of reimbursement, and the negotiability of the instrument is not affected by it. The objection that is raised to the negotiability of this instrument is, not that it is made payable out of a particular fund, but that it is subject to slick a contingency as necessarily embarrasses its circulation and imposes a restraint upon its negotiability, by means of these words contained upon the face of the order: " The bank book of the depositor must accompany this order.” Although these words are upon the face of the order below the signature of the drawer, they were there at the time of its inception, became a substantive part of it and qualified its [343] terms as if they had been inserted in the body of the instrument. Littlefield v. Coombs, 71 Maine, 110; Cushing v. Field, 70 Maine, 50, 54; Johnson v. Heagan, 23 Maine, 329; Barnard v. Cushing, 4 Metcalf, 230; Heywood v. Perrin, 10 Pick. 228; Benedict v. Cowden, 49 N. Y. 396; Costelo v. Crowell, 127 Mass. 293, and cases there cited. Was the order negotiable? The answer to that depends upon the effect of the words "The bank book of the depositor must accompany this order.” If not negotiable, the plaintiff as indorsee can not maintain an action upon it. Noyes v. Gilman, 65 Maine, 589. If their effect is such as constitute a contingency in relation to the payment of the order, dependent upon the production of the drawer’s bank book by the holder or indorsee of the order, then .they must be regarded as such an embarrassment to the negotiation of the order, and such a restriction upon its circulation for commercial purposes as to render it non-negotiable. Without these words the order is payable absolutely, and there is no.apparent uncertainty affecting its negotiability. With them, the order is payable only upon contingency, or condition, and that is upon the production of the drawer’s bank book. This is rendered imperative from the language employed, and the bank upon which the order is drawn, would have the right to insist upon such production of the book in compliance with the terms of the order; and the case shows that it has refused payment upon presentation of the order for the reason that it was not accompanied by the bank book. It cannot, therefore, be regarded as payable absolutely and without any contingency that would embarrass its circulation. The drawer has it in his power to defeat its payment by withholding the bank book. Certainly the bank book of the depositor is within his own control rather than that of the indorsee of this order. It was the necessity of certainty and precision in mercantile-affairs and the inconveniences which would result if commercial paper was incumbered with conditions and contingencies, that led to the establishment of an inflexible rule that to be negotiable they must be payable absolutely and without any conditions or contin [344] gencies to embarrass their circulation. American Ex. Bank v. Blanchard, 7 Allen, 333. In that case the words, "subject to the policy,” being included in a promissory note, were held to render the promise conditional and not absolute, and so the note was held not to be negotiable. Noyes v. Gilman, 65 Maine, 589, 591; Hubbard v. Mosely, 11 Gray, 170. A case in every essential like the one we are considering was before the Supreme Court of Pennsylvania in 1891. A fac simile of the order is given in the opinion. No two cases could be nearer alike. There, as here, the order was drawn on a savings bank. The suit was by the indorsee against the drawer as in this case. There, as here, the order contained a statement upon its face, but below the signature of the drawer, that the " Deposit book must be at bank before money can be paid.” In discussing the question of its negotiability cases are cited from the courts of Maine, Vermont, Massachusetts and New York, as well as from Pennsylvania. In the course of the opinion the court say : " It sufficiently appears from the memoranda on its face that it was drawn on a specially deposited fund held by the bank subject to certain rules and regulations, in force between it and the depositor, requiring certain things to be done before payment could be required, viz: previous notice of depositor’s intention to draw upon the fund, return of the notice ticket with the order to pay, and presentation of the deposit book at the bank,'so that the payment might be entered therein.” . . . "It is, in substance, merely an order on the dollar savings bank to pay J. W. Quinn, or order, nine hundred dollars in nine weeks from date, or February 1, 1888, provided he or his transferee present to the bank, with the order, the notice ticket, and also produce at and before the time of payment the drawer’s deposit book. As already remarked, these are undoubtedly pre-requisites which restrain or qualify the generality of the order to pay as contained in the body of the instrument. They are also pre-requisites with which it may be difficult, if not sometimes impossible, for the payee, transferee, or holder of such an order to comply.” Iron City Nat. Bank v. McCord, 139 Pa. St. 52 (23 Am. State Rep. 166). [345] The order in question was drawn upon a savings bank, and it is common knowledge that all such banks in this State have a by-law which all depositors are required to subscribe to, that "no money shall be paid to any person without the production of the original book that such payment may be entered therein.” This court in the case of Sullivan v. Lewiston Inst. for Savings, 56 Maine, 507, has considered the purpose and necessity of these salutary regulations. We should be slow to countenance any departure from this rule needed for the protection of depositors in our savings banks now numbering more than 160,000, and where deposits aggregate nearly $60,000,000. Inasmuch as this order is not negotiable and no suit can be maintained upon it by the plaintiff as indorsee, it becomes unnecessary to consider the other exceptions. Exceptions sustained.