74 Ky. 180 | Ky. Ct. App. | 1874
delivered the opinion op the court.
This suit was brought in the Louisville Chancery Court by appellee against appellants and others on this instrument:
“Louisville, Ky., January 27th, 1873.
“Four months after date pay to the order of J. M. Bryant ninety-four hundred and twenty and four hundredths dollars, value received, negotiable and payable at the office of the Louisville Banking Company.
$9,420.04. (Signed) W. H. Bbynroth.”
Addressed to Morris, South wick & Co., Louisville, Ky.; accepted by them, and indorsed by J. M. Bryant, H. S. Gaar, P. G. Kelsey, and J. T. Morris. On the back of that paper this agreement appears:
*183 “The drawers, indorsers, and acceptors of this bill agree to pay a reasonable attorney’s fee to any holder thereof, if the same shall hereafter be sued upon, and also pay interest at the rate of ten per cent per annum after maturity until paid, and all are equally bound as drawers, indorsers, as if this bill were in the form of a joint note.
(Signed) Morris, Southwick & Co.,
W. H. Beynroth,
J. M. Bryant,
H. S. Gaar.”
The petition contained three paragraphs.
The first paragraph set forth the principal writing, and declared on it as a bill of exchange.
In the second paragraph it was alleged that at the time the bank purchased the bill Bryant, Beynroth, and Gaar indorsed to it, as collateral security, three notes executed by Morris, Southwick & Co. to them, dated January 28, 1873, the first two being for the sum of $5,000 each, due in eighteen months, and the third for $6,000, due in twenty-four months, and all secured by mortgage on real estate and bearing interest from date at the rate of ten per cent per .annum. It was also alleged that Morris, Southwick & Co. had no defense to the notes. The bank prayed for judgment enforcing its lieu on the notes, and for a sale thereof in satisfaction of the bill.
In the third paragraph, the writing indorsed on the back of the bill was set up, and judgment .was prayed thereon for ten per cent interest on the amount of the bill from its maturity until paid, and for five hundred dollars as an attorney’s fee.
Gaar demurred to the second paragraph upon the ground that it did not state facts constituting a cause of action. The demurrer was sustained; and the bank failing to plead further in that behalf, the second paragraph was dismissed and the cause transferred to the Jefferson Court of Common Pleas,
When the holder of a bill indorses his name upon it and delivers it, such indorsement and delivery pass the title, and when the holder sues upon it and alleges title in himself he is entitled to recover unless his title is denied by plea, when 'it may be necessary to fill up the indorsements in order to furnish evidence to overcome the denial. It is the indorsement of the name of the holder and delivery of the bill, and not the filling up of the indorsement, that operate to pass the title.
There is nothing in the case of Cope v. Daniel (9 Dana, 415), cited by counsel, at all inconsistent with this view.
The only question in that case was whether the holder of a bill indorsed in blank could lawfully fill up the indorsement with an assignment to himself after the death of the indorser, and the court held that he .could. The court quote Chitty on Bills, p. 134, where he says, “It is now, however, considered that a blank indorsement is sufficient of itself to transfer the right of action to any bona fide holder;” and say “this last seems to us
In the old form of declaring on a bill the various indorsements were not required to be set out, and the declaration being taken pro confesso did not furnish the necessary evidence of the plaintiff’s title.
But under our system of pleading, which requires the facts to be stated, the unanswered allegation that the bill has been indorsed by the payee, and that the plaintiff is the holder and owner thereof, proves “specifically and certainly the nature of the right passed to him by the indorser,” and dispenses with the necessity for any evidence whatever, and entitles the plaintiff to recover.
If his ownership be denied, then it would’ be necessary to fill the blank in order to furnish that evidence which is otherwise furnished by his unanswered allegation of ownership.
It has accordingly been held that an instrument in the form of a note promising to pay a specified sum at a designated place on a ■ named day, “ current rate of exchange added,” was not a note, because the current rate of exchange was unascertained and uncertain. (Atkinson v. Mauks, 1 Cow. 707.) And in Davis v. Wilkinson (10 A. & E. 98). it was held that the following instrument was not a note: “I agree to pay to D. £695 at four installments,” the first on, etc., “being £200,” and so On, specifying three others amounting in the aggregate to £600. “The remaining £95 to go as a set-off for an order of B. to T., and the remainder of his debt owing from D. to him.”
In Cushman v. Haynes (20 Pick. 133) it- was held that an acceptance for an uncertain amount — to wit, “the balance of goods not then sold” — was not negotiable.
Other cases to the same effect might be cited, but it is deemed unnecessary, as the rule of the law merchant undoubtedly is that it is an indispensable quality of a note or bill that it shall be for a definite sum in order that it may be negotiable.
But it by no means follows from this conclusion that the ■negotiability of the paper sued on was destroyed by the agreement indorsed thereon that the parties would pay an attorney’s fee if the debt had to be sued for.
In the cases cited, and others referred to by counsel, the amount to be paid at the maturity of the note or bill was un
The reason for the rule that, the amount to be paid must be fixed and certain is that the paper is to become a substitute for money, and this it caix not be unless it can be ascertained from it exactly how much money it represents. As long therefore as it remains a substitute' for money the amount which it entitles the holder to demand must be fixed and certain; but when it is past due it ceases to have that peculiar quality denominated negotiability, or to perform the office of money; and hence any thing which only renders its amount uncertain after it has ceased to be a substitute for money, but which in no wise affected it until after it had performed its office, can not prevent its becoming negotiable paper. Until the paper in question matured the amount due upon it was fixed and certain, and it might therefore take the place of money; when it became overdue, that fact put an end to its cai’eer, and then for the first time the amount to which the holder was entitled became uncertain, or rather might be made uncertain by bringing an action on the bill 'against the parties who signed the agreement indorsed thereon.
We are therefore of the opinion that the demurrer was propei’ly ovei’ruled.
Neitlier of the rejected amendments presented a defense to the action, nor was either admissible as perfecting any defense set up or attempted to be set up in the original answers.
In the first of these px-oposed amendments it was averred in substance that F. G. Kelsey, upon the faith of whose indorsement the defendants indorsed the bill, indorsed it xxnder a contract with the bank that he should not be chax’ged thereon
It appears both from the averments of these amendments and from the bill, that Kelsey indorsed the bill after Gaar and Bryant; and as they could in no event look to him for indemnity or contribution in case they paid the bill, they were not prejudiced by the agreement alleged to have been made.
.It was averred in the second amendment offered and rejected that it was agreed between the appellants and the bank that, before the bill should become obligatory upon them, all the indorsers and the drawer and acceptors should sign the agreement indorsed on the bill, and thus become bound, as between themselves,1 as if they were joint sureties on a promissory note, and that the bank had failed to secure the signature of Kelsey to that agreement.
These facts constituted no defense to the action on the bill. (Hubble v. Murphy, 1 Duvall, 278.)
It is'not alleged in those amendments that Kelsey was solvent either at the date or maturity of the bill, or at the time of tendering the answer; and conceding, as we are inclined to do, that if Kelsey had been alleged to be solvent the breach of such an agreement would have given the appellants a cause of action against the bank which might have been made available as a counter-claim, we think the court properly rejected the amendment, because unless Kelsey was solvent no ‘injury resulted to the appellants from the failure of the bank to obtain his signature to the agreement.
Waiving the question whether the repeal of the statute then in force operated to relieve the appellant from the forfeiture denounced by that section, we are of the opinion no such forfeiture was incurred.
This objection to the judgment raises the question whether the agreement to pay an attorney’s fee can be regarded as an agreement to pay a rate of interest exceeding ten per cent. Interest- is the premium allowed by law for the use of money, while usury is the taking of more for the use of money than the law allows.
If therefore the agreement to pay an attorney’s fee in case the bill had to be sued on can be regarded as the taking or contracting for more than ten per cent for the use of the-money loaned on the bill it is usurious, and the bank thereby forfeited its right to any interest.
But we do not regard such a contract as an agreement to pay usury; it was 'an agreement to pay a penalty in default of payment of principal and lawful interest at maturity, or before suit. Whenever the debtor, by the terms of his contract, can avoid the payment of a larger by the payment of a smaller sum at an earlier day the contract is not usurious, but the difference between the two sums is a penalty. (Blydenburg on Usury, p. 39; Cullen v. How, 8 Mass. 257; Moore v. Hilton, 1 Dev. Eq. 429; Tyler on Usury, 97; Jordan v. Lewis, 2 Stewart, 426.)
But when he can not discharge his contract according to
In this case the contract might have been discharged according to its terms at any time before suit was commenced by the payment of the principal and lawful interest, and it results therefore that the forfeiture denounced by the statute was not incurred.
We have been referred by counsel to the case of Thomasson v. Townsend (10 Bush, 114), as holding that such an agreement is usurious. Speaking of the agreement to pay an attorney’s fee in the event the mortgage was foreclosed, the court said, “It is in the nature of a penalty to be imposed in case the mortgagor should fail to pay off and satisfy the mortgage debt before judgment.” It was also said that “such contracts are in their nature usurious.” But when the Avhole opinion is considered together it is clear that the court did not regard the contract as usurious in fact or in law, but as a penalty merely; for it is said that, while if the debtor resists its enforcement, the court will relieve against it as a penalty ; yet “ when a judgment is rendered by default in a case like this, upon a petition setting out the contract in accordance with the rules of pleading, the defendant will be Avithout remedy. This is the extent of the rule intimated in the opinion in Smith v. Kahn & Will (MS. Opinion, November 7, 1871). In this case the defendant was in court resisting the enforcement of the penalty.”
The court not only treated it as a penalty and called it by that name, but said if judgment Avas allowed to- go by default upon appropriate pleading the defendant would be without remedy, which can never be the case Avhen the record sIioavs that judgment has been rendered for usury. There is therefore nothing in the opinion in that case inconsistent with the conclusion reached in this case, but on the contrary that opinion is an authority in support of it.
Beynroth is interested in the deoision of that question, and is a necessary party to the appeal; and, as he is not an appellant, and a cross-appeal can only be prosecuted against appellants, the cross-appeal must be dismissed for want of necessary parties. (Section 895, Civil Code; Smith v. Northern Bank, 1 Met. 575.)
Wherefore the judgment is affirmed on the original appeal, and the.cross-appeal is dismissed.