Continental National Bank of Chicago v. McGeoch

Lyost, J. Under the rule which has prevailed in this court since the decision of the case of Diggle v. Boulden, 48 Wis. 477, if the demurrers to the complaint were not well taken the orders striking them out must be affirmed. It will be observed that the complaint contains no aver-ments of demand and notice to charge the indorsers of the several instruments in suit as such, but that the indorsers of such instruments are charged as primarily liable for the payment thereof. If the instruments are negotiable promissory notes, the omission of such averments renders the complaint demurrable as to the indorsers, for without such demand and notice they are not liable on the instruments. If the instruments are not negotiable, inasmuch as the indorsements were made before they were negotiated, the indorsers are liable as original promisors, and no such de [336] mand and notice were necessary to charge them as such. Houghton v. Ely, 26 Wis. 181; Gorman v. Ketchum, 33 Wis. 427; Parry v. Spikes, 49 Wis. 384. It was said in the argument by counsel for the plaintiff that under the laws of the state of Illinois, where these instruments were made and dated and where they are payable, the indorsers are mere guarantors, whether the instruments are negotiable or not, and are liable thereon without any proceedings to charge them as indorsers. The proposition, if correct, is not available here, because the laws of Illinois in that behalf are not pleaded, and on demurrer we cannot know judicially what they are. Could we indulge in any presumption on the subject, it would be that the law-merchant prevails in that state, and certainly, under the law-merchant, demand and notice are necessary to charge the indorser of negotiable paper. Hence the controlling question for determination is, Are the instruments, in suit negotiable? That is to say, are they promissory notes, within the law-merchant? Each of these instruments contains two contracts in the alternative. One is a contract by the defendant signing the instrument to pay the plaintiff or order a specified sum of money at a time specified therein. Were this all there is of the instrument, the same wmuld be negotiable. See Morgan v. Edwards, 53 Wis. 599, for an authoritative definition of a promissory note. The 'alternative contract is that the plaintiff might sell the collateral securities mentioned therein, and, if these declined in value, it might sell the same before the money for which the instruments were given would otherwise become due, in which case the proceeds of the sale, less the expenses thereof, should be applied in payment or part payment of the debts, and'if a deficiency remained the amount thereof should become due forthwith. Had the collateral declined in value the next day after the plaintiff discounted any of the instruments in [337] suit, we cannot doubt the plaintiff was authorized to sell them at once, and could have maintained an action upon the instrument immediately thereafter for any deficiency remaining unpaid upon the instrument. Counsel for appellants submitted an ingenious argument to the effect that, although in the contingenc}7 mentioned the plaintiff was authorized to sell the collaterals before the money for which the instruments in suit were given was due, yet it was not authorized to apply the net proceeds of such sale in payment thereof until the money became due by the other terms of the instruments, and hence such instruments contained no agreement to pay any portion of the debt until the same thus became due. Ye cannot accept the argument as sound. The plain, unambiguous language of the contract is that, in such case, the contract of the defendants was “ to pay the deficiency forthwith after such sale.” So, had the collateral been sold the next day after the instruments were executed, and a deficiency remained after applying the proceeds of such sale, by the terms of the contract the deficiency became due and payable at once. There seems no room here for any different construction of the language employed. Thus we find that such alternative contract introduces two elements of uncertainty in the instruments, to wit, in the sum payable in case any sum becomes due before the time first specified in the instrument, and in the time when the same shall so become due. These elements of uncertainty thus introduced into the instruments, particularly the one first mentioned, destroy their negotiability. Morgan v. Edwards, 53 Wis. 599; First Nat. Bank v. Larsen, 60 Wis. 206; Cushman v. Haynes, 20 Pick. 132; 2 Am. & Eng. Ency. Law, 329. It is further argued that, inasmuch as the instruments do not draw interest from date, presumably the interest thereon to the time they became due was retained by plaintiff when it discounted them, and, because the contract provides for [338] the payment of interest on any deficiency, the above construction thereof might require’ the defendants to pay double interest on the same debt; and it is claimed that a construction must be erroneous which leads to such a result. It is a sufficient answer to this position that no method is given for computing the amount of such deficiency, and a correct computation thereof would exclude double interest. See note to this ease in 41 N. W. Rep. 409.— Rep. It is probable that, had no authority been given to sell the collaterals before the debt became due, there would still remain an element of uncertainty in the instruments fatal to their negotiability. The authorities just cited seem to support this view. Thus in the work last cited it is said that a promise to pay a fixed sum, subject to deductions from some cause stated in writing, is uncertain, and therefore not negotiable. In Cushman v. Haynes it was held (Shaw, C. J., delivering the opinion) that an acceptance by a consignee of goods for $1,000, “ or what might be due after deducting all advances and expenses,” is not negotiable, and such is the doctrine of this court as laid down in Morgan v. Edwards, and First Nat. Bank v. Larsen, supra. It must be held that none of the instruments in suit are negotiable, and hence the action is well brought thereon against the indorsers as original promisors. It necessarily follows that the objection that causes of action are improperly joined is not well taken. Indeed, that ground of demurrer is rested upon the hypothesis that the complaint states no cause of action against the indorsers. The hypothesis being negatived, the objection fails. By the Court.— Both orders appealed from are affirmed.