Citizens N. Bank v. Piollet

Opinion, Mr. Justice Green: This is an action against the indorser of a promissory note. He is sued upon his contract of indorsement and not upon any other or independent special contract in relation to that indorsement. His liability therefore in the present action must be the technical liability of an indorser or the suit must fail. The note itself, without the written memorandum which appears upon its face, is a complete and perfect obligation of a negotiable character; and if the written memorandum were not there, we know of no reason why there should not be a recovery against the defendant as a mere indorser. But the memorandum is there; it is not alleged nor offered to be proved that it is there without authority, and if it has a controlling effect apon the note, it must be treated as a part of it. Its meaning is entirely plain. The words, written across the end of the note, and on the lace of it, in immediate proximity to the w'ords of the note, are, “This note is given for advancements, and it is the understanding it will be renewed at maturity.” The statement that it is given for advancements does not affect the certainty of the note and it could easily be regarded as a mere memorandum, not changing the contract and therefore not material. But the remainder of the writing is an agreement that the note will be renewed at maturity. As the bank is the holder and discounted the note when it was given, it is undoubtedly affected by the terms of the memorandum, and must be considered as having agreed to renew the note at its maturity. This being so, the obligation of the note is not an absolute, unconditional contract to pay the money at maturity. It is a qualified obligation to pay, with a condition that, instead of paying, the holder may give another note in its place which the bank would be bound to accept instead of money. This being so, the case comes within the rule that commercial paper, to be negotiable, must be certain, unconditional, and not contingent. [198] In Overton v. Tyler, 8 Pa. 346„ Gibson, C. J., said: “But a negotiable bill or note is a courier without luggage. It is requisite that it be framed in the fewest possible words, and those importing the most certain and, precise contract; and, though this requisite be a minor one, it is entitled to weight in determining a question of intention. To be within the statute, it must be free from contingencies or conditions that would embarrass it in its course; for a memorandum, to control it, though indorsed on it, would be incorporated with it and destrby it. But a memorandum which is merely directory will not- affect it.” In Woods v. North, 84 Pa. 407, Shabswood, J., said: “It is a necessary quality of' negotiable paper that it should be simple, certain, unconditional, not subject to any contingency. It would be a mere affectation of learning to cite the elementary treatises and the decided cases which have established this principle. It is very important to the commercial community that it should be maintained in all its rigor.” It is manifest from the foregoing that the only inquiry necessary to determine the question of negotiability is, the effect of the memorandum upon the terms of the note. As we have seen, it makes an important change in the note, in that, instead of the note being a distinct contract to pay a fixed sum of money at a day certain, the holder has agreed to accept, instead of payment in money, another note payable at another time which is not fixed. The obligation of the note, therefore, is uncertain, depending on whether the maker chooses to pay it or give a new note in place of it. This uncertainty destroys its negotiability,- and for that reason relieves the indorser. As this is not an action against the indorser to recover damages for breach of an agreement by him to continue his indorsement, that aspect of the case cannot be considered. Judgment affirmed.