First National Bank v. Barrett

157 P. 951 | Mont. | 1916

MR. JUSTICE HOLLOWAY

delivered the opinion of the court.

This action was brought to recover upon an instrument in writing which it is alleged was transferred to plaintiff by indorsement before maturity. The writing, without the indorsement, follows:

“Stockholders’ Purchasing Contract.

“Nov. 15th, 1910.

“After a good and satisfactory examination of the Percheron stallion named Bobino No. 33674 owned by C. W. Green, of Miles City, Mont., and recognizing his value as a means of improving our horse stock, we, the undersigned subscribers, hereby purchase said stallion of C. W. Green accordingly, and we hereby authorize the delivery of said horse to any one of the subscribers hereto.

“$3,600.00. Miles City, Mont., Nov. 15th, 1910.

“For value received, I promise to pay to the order of C. W. Green, the sum of thirty-six hundred dollars, payable at the First National Bank of Miles City, Montana, in payments as follows:

Thirty-Six Hundred Dollars, Noy. 15th, 1911.

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with interest from date at the rate of 8 per cent., payable semiannually, and, if not so paid, the whole sum of both principal and interest to become due and collectible at the option of the holder hereof, and, in case suit or action is instituted to collect payment, I agree to pay reasonable attorney fees.

“M. Barrett.

“James F. Blair.

“W. G. Blair.

“Nay & Jacobs.

“James Mansfield.

“John Thoma.

“Frank Esterwold.

“M. K. Davison.

“James Elmose Co.

“J. R. Scott.”

The answer consists of a general denial of all the allegations in the complaint, a specific denial that there was ever any consideration for the instrument, and the further denial that the defendant ever executed it. The answer alleges affirmatively that, if defendant’s signature is affixed to the writing, it was obtained by fraud. The reply denies all new matters.

Upon the trial the court adopted the theory of the defendant that the instrument is non-negotiable in character, and that any defenses available as against the original payee were equally available as against the plaintiff, and instructed the jury accordingly. In answer to a special interrogatory the jury found that there was not any consideration for the writing. A general verdict in favor of the defendant was returned, and from the judgment entered thereon and' from an order denying a new trial, the plaintiff appealed.

■ Appellant insists that the instrument in question is a negotiable promissory note, and that the court erred in the theory adopted for the trial of the case. Our Negotiable Instruments Act (Rev. Codes, secs. 5842-6037) defines a negotiable promis-' [1] sory note as follows: “A negotiable promissory note within the meaning of this Act is an unconditional promise in writing made by one person to another signed by the- maker engaging to pay on demand, or at a fixed or determinable future time, "a sum certain in money to order or to bearer. Where a note is drawn to the maker’s own order, it is not complete until indorsed by him.” (Sec. 6032.) The essential elements are: (1) It must be in writing; (2) it must be signed by the maker; (3) it must contain an unconditional promise to pay a sum certain in money; (4) it must be payable to order or to bearer; (5) it must be payable on demand or at a fixed or determinable future time. These are the tests prescribed by statute to which every instrument must be subjected in order to maintain the character and enjoy the privileges of a negotiable promissory note.

To what extent does the instrument in question meet these [2] statutory requirements! (1) It is in writing. (2) It is signed by the makers. (3) It contains an unconditional promise to pay a sum certain in money, to-wit, $3,600. (4) It is pay-: able at a fixed time, November 15, 1911. (5) It is payable to the order of C. W. Green. The instrument recites that the makers have purchased from C. W. Green the Percheron stallion Bobino, but this addition does not transgress any provision of the Negotiable Instruments Act; on the contrary, such a recital is specifically authorized. Section 5851 provides that an unqualified promise is unconditional within the meaning of the Act, though' it is coupled with a statement of the transaction which gives rise to the instrument. This writing in question also provides: (a) That the indebtedness shall bear interest at a fixed rate, payable semi-annually; (b) that upon default in the payment of an interest installment the principal sum, with interest, shall become due; and (e) that the makers shall pay an attorney fee in case it is necessary to enforce collection of the indebtedness. Provision is made in the Negotiable Instruments Act for all of these apparent qualifications to the terms of the definition. Section 5850, subdivision 1, covers the first; subdivision 3 the second; and subdivision 5 the third. This leaves nothing of the instrument except the following: “We hereby authorize the delivery of said horse to any one of the subscribers hereto.” Respondent’s counsel direct our attention to the fact that the promise to pay is coupled with an order for the delivery of the horse. Even so, it does not affect the negotiable character of the instrument. It still meets every requirement of the definition contained in section 6032, above.

The statement of our reason for the decision in State v. Mitton, 37 Mont. 366, 127 Am. St. Rep. 732, 96 Pac. 926, is not as clear as it might have been, though the correctness of the conclusion upon the character of the instrument there involved cannot be questioned. That writing contained an order for school supplies to be shipped “subject to approval,” and this clearly rendered the promise to pay conditional—conditioned upon the approval of the goods ordered. The decision in Cornish v. Woolverton, 32 Mont. 456, 108 Am. St. Rep. 598, 81 Pac. 4, was rendered under a different statute and is not in point here.

The writing in question is a negotiable, promissory note within the meaning of our Code. (See Crawford’s Annotated Negotiable Instruments Law, 4th ed., p. 17.)

But counsel for respondent insist that the pleadings raise an issue as to plaintiff’s ownership of the note and as to whether defendant ever signed the instrument in question, and that the general verdict in favor of the defendant is, in effect, a finding that plaintiff is not the owner of the note, and that defendant’s [3, 4] signature thereto is a forgery. It follows, of course, .that if plaintiff has no title to the note, it cannot maintain this action, and it is equally clear that, if defendant’s signature to the instrument is a forgery, and he is not precluded from setting up this defense, he cannot be held to the original payee or to anyone else; but the general verdict was apparently prompted solely by the finding of no consideration. In an action by Green, the original payee, that finding would be conclusive. The defenses of want of title in plaintiff and forgery of defendant’s signature were equally available whether the instrument be negotiable or non-negotiable; so that the only defense to which the court’s instruction No. 2 could have referred properly was the defense of want of consideration, and that instruction therefore, in effect, charged the jury: “If you find that there was not any consideration for the instrument as between Green and Barrett, then your general verdict must be for the defendant.” In view of our decision that the instrument is negotiable in character, this instruction is erroneous, as was likewise the theory upon which the case was tried.

The judgment and order are reversed and the cause is remanded for a new trial.

Reversed and remanded.

Me. Chief Justice Brantly and Mr. Justice Sanner concur.