69 Neb. 180 | Neb. | 1903
The bank brings this action to recover upon a promissory note executed by Roblee to the Beatrice Creamery Company, his co-defendant, indorsed by said company to a bank at Broken Bow, and sold and indorsed to the plaintiff by the latter. At the time the note was executed and delivered, and as a part of the same transaction, Roblee executed and delivered a mortgage to the company, securing said note, which contained, among other tilings, this provision:
“Said L. O. Roblee agrees to deliver all the milk from said cows to the separator station run by the said Beatrice Creamery Go., located in Broken Boav, and said Creamery Company agrees to credit said Roblee aatIIi proceeds of sale of butter-fat from said milk, said Roblee agreeing to regularly milk and deliver same, and properly feed said coavs to hold up the Aoav of milk.”
It appears that the creamery company from time to time remitted considerable sums to the bank at Broken Bow, at which the note was payable, to be credited upon the note under this provision. But said bank, having sold the note to plaintiff, failed to transmit the money so sent, and afterwards became insolvent. These facts being pleaded, the plaintiff claimed that it Avas a bona fide holder for value, in the usual course of business, and that the payments made to the bank at Broken Bow should not be credited for the reason that said bank did not have posses
It will be seen that the case must turn upon the question whether the note was negotiable in view of the provision in the mortgage. The plaintiff contends that the provision quoted does not amount to an agreement that the maker might pay the note in the proceeds of butter-fat, and that, even if it does, the agreement to that effect is not incorporated in the note and the plaintiff is not bound nor the negotiability of the note affected thereby. We do not think either position well taken. Upon the first point, counsel say:
“The provisions of the mortgage did not give Roblee the right to pay the note in butter-fat, but simply made the creamery company the agent of Roblee, the creamery company agreeing to credit him with the proceeds of the sale of butter-fat.”
But the agreement is that Roblee will feed the cows so as to “hold up the flow of milk,” will regularly milk them, and will deliver all the milk to the company. So far from the contract not giving him the right to pay in that manner, it compels him to pay in the proceeds of butter-fat so far as sufficient might be produced before maturity of the note. It can hardly be said that the creditor was agent of the debtor to pay himself out of the debtor’s property delivered to him under the agreement. The arrangement was for the benefit of the company, to enable it to apply the proceeds of the fat yielded by the milk of the mortgaged cows, upon which otherwise it had no claim, and it was acting as its own agent in so doing.
We think the provision quoted, if to be taken as part of the note, necessarily destroys its negotiability. The substance of the agreement is that from time to time prior to maturity Roblee shall deliver milk to the company and that the latter shall credit the proceeds of the butter-fat derived therefrom upon the note. Roblee is bound to deliver the milk, and to feed and care for his cows in such a
“There should be entire certainty and precision as to the amount to be paid. The reason of this is especially obvious; for if the note is to represent money effectually, there must be no chance of mistake as to the amount of money of which it thus takes the place and performs the office. On this point, therefore, the cases are quite stringent.” 2 Parsons, Notes & Bills, 37.
In consequence, the incorporation of a collateral agreement in a promissory note, which requires or may cause payment to be made of uncertain sums at uncertain times before maturity, and thus renders it impossible to say hoAV much, if anything, Avill be due at maturity, renders the note non-negotiable. Lincoln Nat. Bank v. Perry, 66 Fed. 887; Commercial Nat. Bank of Chicago v. Consumers’ Brewing Co., 16 App. Cas. (D. C.) 186; Continental Nat. Bank of Chicago v. Wells, 73 Wis. 332; Smith v. Marland, 59 Ia. 645; South Bend Iron Works v. Paddock, 37 Kan. 510; Commercial Nat. Bank of Selma v. Crenshaw, 103 Ala. 497. In Lincoln Nat. Bank v. Perry, the note contained an agreement that if the collateral security deposited to secure its payment should depreciate at any time prior to maturity, the payee or holder might call for further se
“One of the chief requisites of a negotiable note or bill is that it shall show with certainty the amount, payable thereon at maturity and that it shall not be cumbered with conditions which render the amount then payable uncertain. * * * It frequently happens that notes discounted by banks contain a. statement that certain securities have been deposited as collateral to secure their payment,. together with a stipulation authorizing a sale of such securities, in a certain manner, at the maturity of the paper, if it is not then paid. Such recitals and stipulations do not render the time or fact of payment, nor the amount to be paid at maturity, in the least degree uncertain; and for that reason it is generally held that they do not impair the negotiability of a note that .is, in other respects, so drawn as to satisfy the requirements of the law merchant. * * * It is manifest, however, that an important element of certainty is destroyed by a collateral agreement appended to a note which may cause a payment to be made thereon of an uncertain sum at an uncertain time before maturity, and thus render the amount payable at maturity somewhat hiss than the amount specified on the face of the paper. A note of that description, which carries with it the probability, or even the possibility, that it may be partially or wholly extinguished before maturity, -differs essentially-from bank bills and other forms of currency which negotiable paper is supposed to resemble, and whose functions it is intended to perform. It has accordingly been held in several well-considered cases that stipulations of that nature embodied in a promissory note will impair its negotiability.”
In Commercial Nat. Bank of Chicago v. Consumers’ Brewing Company, the provision was that the principal should be “curtailed monthly,” but without specifying in what amount. There was also a provision for sale of collateral in case it depreciated before maturity and further
The other point has been disposed of in a number of recent decisions. Lantry v. French, 33 Neb. 524; Grand Island Savings & Loan Ass’n v. Moore, 40 Neb. 686; Seieroe v. First Nat. Bank, 50 Neb. 612; Bradbury v. Kinney, 63 Neb. 754; Consterdine v. Moore, 65 Neb. 291; Garnett v. Meyers, 65 Neb. 280; Kendall v. Selby, 66 Neb. 60.
In Garnett v. Meyers, this court said it was “well settled in this state that, although a note is absolute in form, every provision affecting the same, the amount, or manner of payment — that is, the contract, in regard to the indebtedness itself, contained in a mortgage given to secure it, and made contemporaneously — affects the note in precisely the same manner, and to the same extent, as though included with it on the same piece of paper, as to all persons chargeable with notice.”
As a rehearing has been ordered in Garnett v. Meyers, upon other grounds, however, and as Kendall v. Selby follows that case, counsel have questioned the soundness of
It is suggested that in the case at bar the note contains
We therefore recommend that the judgment be reversed and the cause remanded for a new trial.
By the Court: For the reasons stated in the foregoing opinion, the judgment of the district court is reversed and the cause is remanded for a neiv trial.
Reversed.