Morgan v. Edwards

Lyon, J. The only question to be determined on this appeal is, whether the instrument in suit is a promissory note. If a note, it is negotiable, as a matter of course, because by its terms it is payable to the payees named therein or order. Mr. Byles, in his treatise on Bills and Notes, defines a promissory note as being “ an absolute prornise in writing, signed but not sealed, to pay a specified sum at a time therein limited, or on demand, or at sight, to a person therein named or designated, or to his order, or to the bearer.” Page 11. Judge Story, in his commentaries on the Law of Promissory Notes, says: “A promissory note may be defined to be a written “engagement .by one person to pay another person therein named, absolutely and unconditionally, a certain sum of money at a time specified therein.” Page 2. It is claimed that the instrument in suit is not a promissory note, because: (1) The stipulation to pay expenses of collection makes the amount uncertain which the defendants promise to pay. (2) The right given the payees to declare the money due — 607 — at any time they may deem themselves insecure, also rendered the time uncertain when the money would become payable. (3) By the terms of the instrument, the title to and the ownership and right to the possession of the machine for which it was given, remained in the payees, and hence the instrument shows on its face that there was no consideration for it. These propositions were very ably argued by the learned connsel for the respective parties, and they referred us to numerous adjudications bearing upon them. The learning and research of counsel have greatly aided us in our deliberations upon the case. On the first two of the above propositions there is much conflict in the cases. Many courts whose decisions command the highest respect, have held that stipulations like those under consideration, in an instrument which would otherwise be a negotiable promissory note, destroy its character as such, while many other courts of equal authority have held the contrary doctrine. The cases on the subject are too numerous to be here cited, but references to many of them will be found in the briefs of the respective counsel. It may be remarked, preliminarily, that the statute (R. S., 495, §1675) is merely a reenactment of the substance of the statute 3 & 4 Anne, c. 9, which was passed for the purpose of establishing the negotiability of promissory notes, that quality having been denied to them by Lord Holt, in Clerke v. Martin, 2 Ld. Raym., 757. See Smith’s Mer. Law, 199. Neither the statute of Anne nor our statute attempts to define a promissory note, or to state its essential qualities. To ascertain these we must refer to the principles of mercantile law as laid down in approved treatises, and in those adjudged cases which are regarded as authoritative. The first specific ground upon which the negotiability of the instrument in suit is denied, will now be considered. The instrument contains this clause: “We also agree to pay all expenses, including attorney’s fees, incurred in collecting;” meaning, of course, in collecting the money which the defend — 608 — ant therein promised to pay E. M. Birdsall & Co. or order. The sum to be so paid is uncertain in amount, and dependent upon the contingency that expenses in that behalf are incurred. The promise to pay such expenses (if any are incurred) is a part of the instrument, and cannot be separated from the preceding promise therein to pay a specified sum and interest. The payment of the certain and the uncertain amounts, added together, is, so to speak, the aggregate promise in the instrument. It would seem, therefore, on principle, that there is an element of uncertainty in the instrument in respect to the sum of money for which it was given. If so, it contains no promise to pay a certain or specified sum, and hence, under all, or nearly all, of the authorities, is not a promissory note. A large number of cases have been cited which hold that if the amount payable at the maturity of the paper is fixed and certain — the instrument containing the other essentials of a note,— it is still a note, although it contains a further promise to pay an uncertain sum for expenses or costs of collection if not paid at maturity, or if suit be brought upon it. We have examined many of these cases, and in all thus examined we find express stipulations that such expenses or costs are only payable provided default be made in the payment of the note at maturity, or unless suit be brought upon it, which implies a default. But, as already intimated, there are many adjudications holding that an instrument containing such a stipulation, notwithstanding the amount due at maturity is fixed and certain, is not a promissory note. The cases in this court which are claimed to have any bearing on the question at issue between the courts, are Leggett v. Jones, 10 Wis., 34; Blake v. Coleman, 22 Wis., 415; and Kirk v. Dodge Co. M. Ins. Co., 39 Wis., 138. If there are any other cases decided by this court, affecting the question, we have failed to recall them. In Leggett v. Jones the opinion was expressed, confessedly upon a slight examination, that an instrument in the form of — 609 — a promissory note, for the payment of a certain sum of money, “with exchange on New York,” was in fact a promissory note. The question in that case was not whether the instrument was a note under the law merchant, but whether it was a contract for the payment of money only under the code. The question was answered in the affirmative, and that is the whole basis of the judgment. The case cannot justly be regarded as authority for the proposition that an instrument containing such a stipulation can be a promissory note, ■although it has been so referred to in some of the elementary books. JBut liad this court so decided, it is believed that the judgment might be upheld on substantial grounds, without violating the rule which requires certainty in a promissory note as to the amount payable. A note is ¡jayable in lawful money of the United States, which is at par in every portion of the country. If a note is made payable in Milwaukee, with exchange on New York, it requires precisely the same sum of money to pay it as would be required had it been made payable in New York. The exchange is the cost of drawing a bill and transmitting the money to New York to meet it. In Leggett v. Jones the note was payable to the Dodge County Bank, with exchange on New York. Had the note been made payable in New York, no one would claim that there was any uncertainty in the amount, although the maker would necessarily have been subjected to the expense, uncertain in amount, of providing funds there to meet it. It is precisely that expense which constitutes and governs the cost of exchange. Hence, the same sum of money which would have been required to .pay the note in New York, would have paid it at the Dodge County Bank, including the exchange, according to its terms. In speaking of the cost of exchange, we refer only to transactions in money. Nominally, the cost of exchange may. include the discount on the ordinary currency of the place where the bill is drawn, at the place of payment; and such discount — 610 — may greatly fluctuate. But a note payable with exchange is not affected by these facts, for it cannot be payable in anything but money (unless by virtue of some special statutory-provision^ and still be a note. There can be no discount on money to affect the cost of inland exchange. Hence, it may well be said that the uncertainty in the amount due on a note which stipulates for the payment of exchange between two points, is rather apparent than real and substantial. Blake v. Coleman merely decides that an unsigned memo-' randum on the back of a note, qualifying the time of payment,- and which wars placed there before the note was signed, became a part of the contract and binding upon the payee. . In Kirk v. Dodge Co. Mut. Ins. Co. the instrument before the court was in the form of a negotiable promissory note made by the plaintiff to the defendant. It was therein stated that the same was given for premium for an insurance policy of a specified number. The note also contained the conditions that if not paid at maturity the whole premium on the policy should be considered earned, and the policy should be null and void while the note remained unpaid. The controlling question was, whether the instrument was a promissory note, and the court held that it was. Manifestly there was no uncertainty in the sum required to pay the note at maturity, or at any time after maturity. True, it provided that the penalty for default should be that certain other obligations should become due, presumably before the time of payment specified therein; but that provision did not make such obligations a part of the note then under consideration, or increase the amount of money required to pay and discharge such note. The note called for $4-0, with interest, and there was no stipulation under which the maker could be required, under any circumstances, to pay more than $40 and the accrued interest to discharge the note. Obviously, none of these eases commit this court to either line of conflicting decisions before mentioned. We are thus — 611 — free to choose between tbem when'a case arises requiring a choice. This case does not require*-us to determine whether an instrument providing for the pá/ment of an uncertain sum for expenses of collection, or of a suit, in case of default, can or cannot be a promissory note. The stipulation to pay such expenses, contained in the instrument in suit, is not made contingent upon default of payment at maturity. If the money had been paid at the specified place on the day it was due, the defendants would have been liable -under their agreement to pay the holder’s necessary expenses of receiving it. If the bank had received it for the plaintiff, it might lawfully have charged a fee for so doing, or the holder might have sent some other agent to the bank to receive the money, and such agent would have been entitled to compensation for his services. In either case the charges would be expenses incurred in collecting the money, and such expenses the defendants agreed to pay by the terms of the instrument. Because of this, and because the amount thereof is uncertain, the instrument is not a promissory note, and therefore not negotiable. As the foregoing views are decisive of the case, necessarily resulting in an affirmance of the judgment, it is thought advisable not to determine the other propositions so ably argued by counsel. By the Gourt.— Judgment affirmed.