Coffey v. DAY & NIGHT NAT. BANK

• Decision Date: 07 December 1926
• Parties: COFFEY v. DAY & NIGHT NAT. BANK OF PIKEVILLE.
• Court: U.S. District Court — Eastern District of Kentucky

21 F.2d 661 (1926)

COFFEY v. DAY & NIGHT NAT. BANK OF PIKEVILLE.

District Court, E. D. Kentucky.

December 7, 1926.

Goodykoontz & Slaven, of Williamson, W. Va., and Harry Scherr, of Huntington, W. Va., for plaintiff.

Browning & Reed, of Ashland, Ky., Martin & Smith, of Catlettsburg, Ky., and Johnson, Auxier & Hinton, of Pikesville, Ky., for defendant.

ANDREW M. J. COCHRAN, District Judge.

This action is before me on plaintiff's demurrer to the answer, set-off and counterclaim of the defendant. It is brought on a certificate of deposit issued by the defendant to W. P. T. Varney, and transferred by him to plaintiff for a valuable consideration before maturity. The certificate is in words and figures as follows, to wit:

The answer sets up, by way of set-off, an indebtedness of Varney, the payee, to defendant, in the sum of $5,000, owing to it at the time the certificate became due. The sufficiency of this defense depends on whether this certificate of deposit was negotiable and whether the plaintiff is a holder in due course. By section 3720b1, Kentucky Statutes, in order to the negotiability of an instrument, it is essential amongst other things that it "be payable to the order of a specified person or to bearer." By section 3720b8 it is provided that an instrument is "payable to order where it is drawn payable to the order of a specified person or to him or his order."

The certificate here is not payable to the order of Varney. The question is whether it is payable to him or to his order. Defendant contends that it is not, and that it is payable only to Varney himself. Had the wording been "payable to himself or order," instead of "payable to himself order," the requirement of the statute would have been met. By section 3720b10 it is provided that the instrument "need not follow the language of this act, but any terms are sufficient which clearly indicate an intention to conform to the requirements thereof." If, instead of inserting the word "or" between the words "himself" and "order," the words "or to his" had been inserted, the instrument would have followed the exact language of the statute. The word "order" is not the only indication which the instrument contains that it was intended that it should be negotiable. A further indication is to be found in the words, "on the return of this certificate properly indorsed." These words contemplate that the instrument may be indorsed by the payee, in which case it must bear the indorsement of such indorsee when presented for payment. In the case of Forrest v. Safety Banking & Trust Co. (C. C.) 174 F. 345, the following instrument was involved.

"No. 1853. Philadelphia, January 2d, 1909 $3,000.00

"Peter F. Fallon has deposited in the Safety Banking & Trust Company three thousand dollars to the credit of himself, payable in current funds on return of this certificate properly indorsed on July 1, 1909. Interest 3½ per cent. per annum.

"H. J. Colver, Cashier. "H. L. Rock, Secretary.

"This certificate of deposit is not subject to check and is only payable at maturity."

It was held: "The present certificate is in effect payable to Fallon or his order, for this is necessarily implied by the phrase `properly indorsed.'"

Had the certificate here not contained the word "order," it would still be a question whether, in view of this clause, it should not be construed to be payable to Varney or his order. The defendant has treated the certificate as if it did not contain this clause, "on the return of this certificate properly indorsed." The word "order," as well as this clause, is in print, whereas the word "himself" is in typewriting. Defendant contends that this circumstance calls for the application of subdivision (4) of section 3720b17, which is in these words:

"Where there is conflict between the written and printed provisions of the instrument, the written provisions prevail."

The conflict had in view here is one that exists after the instrument has been properly construed. Before, therefore, the question as to whether there is any such conflict can be considered, the certificate involved here must be construed. The rule as to the construction of contracts in general is thus stated in Williston on Contracts, vol. 2, § 619, p. 1199:

"The court will, if possible, give effect to all parts of the instrument, and a construction which gives a reasonable meaning to all its provisions will be preferred to one which leaves a portion of the writing useless and inexplicable; and, if this is impossible, a construction which gives effect to the main apparent purpose of the contract will be favored."

The rule applicable in the construction of negotiable instruments is stated thus in 8 C. J., subject "Bills and Notes," § 136, p. 85:

"A bill or note, the same as any other instrument must be construed as a whole, so as to give effect to every part of it, if possible. The contract must be collected from the four corners of the document, and no part of what appears there is to be excluded."

The rule, where there is a possible conflict between written and printed matter in a contract is stated thus in Williston on Contracts, vol. 2, pp. 1205, 1206:

"Of course, if the written and printed matter can by any reasonable construction be reconciled, this will be done."

It is presented thus in Harding v. Cargo of Coal (D. C.) 147 F. 971, 973:

"The principle of construction invoked by the learned counsel for the libelant is resorted to by courts upon questions where there is an irreconcilable conflict between two provisions in a contract; but this method of interpretation is not, and should not be, followed where a reasonable construction may be given, which gives force to every term and provision of the contract, and is, at the same time, consistent with law and with the intention of the parties."

It is presented thus in Gabbert v. Oil Co., 76 W. Va. 718, 86 S. E. 671:

"In the interpretation of a contract, partly printed and partly written or typewritten, as in the use of a printed form, the writing will not be given greater weight than the printing if the one is consistent and reconcilable with the other. It is only where there is irreconcilable repugnance and conflict between the written and the printed portions that the former will prevail over the latter. Both must be given force where they can consistently stand together."

And it is presented thus in Page on Contracts, § 1119 (9 Cyc. 584):

"The one will not be given control over the other if they can possibly be reconciled; it being presumed that the contract contains no provisions or clauses, not intended by the parties."

In the foregoing quotation from Williston on Contracts it is said that, where it is impossible to give effect to all parts of the instrument, "a construction which gives effect to the main apparent purpose of the contract will be favored." To this end he continues:

"Indeed, in giving effect to the general meaning of a writing particular words are sometimes wholly disregarded or supplied. Thus `or' may be given the meaning of `and' or vice versa, if the remainder of the agreement shows that a reasonable person in the position of the parties would so understand it. * * * The reason for interpolating, omitting, or disregarding specific words, is that in the remainder of the writing an intention is expressed which makes it evident that particular words were erroneously used."

If such course is justified where effect cannot be given to every part of the instrument, much more is it justified when, by pursuing it, effect can be given to every part. In this connection note should be taken of this further expression of Williston, at page 1203:

"Since one who speaks or writes can by exactness of expression more easily prevent mistakes in meaning than one with whom he is dealing, doubts arising from ambiguity of language are resolved in favor of the latter; and, as he will ordinarily be the promisee of the promise in question, it is sometimes stated that the contract, if ambiguous, will be construed in favor of the promisee."

In view of these several expressions, it must be taken that the word "order" and the clause "on the return of this certificate properly indorsed" cannot be "excluded" or treated as "useless and inexplicable" so as to leave the obligation of the certificate to Varney alone, but should be presumed to have been intended to constitute a part of the undertaking. To this end the word "or" or the words "or to his" should be supplied or interpolated between "himself" and "order." By so doing there is no conflict whatever between the written and printed portions of the instrument, and what we have is a negotiable instrument. Had the provision been that the sum called for should be payable to "himself and to his order," possibly there might be room to say that there was a conflict. In that case the authorities cited seem to justify the substitution of "or" for "and" in order to remove such conflict.

It must be held, therefore, that the instrument in question was negotiable under section 3720b1, Kentucky Statutes. The defendant contends further that the plaintiff was not a holder in due course, as required by section 3720b52, in that the instrument in question was not "complete and regular on its face," which is the first requirement of that section in order that one may be such a holder. In order to dispose of this contention, it is essential to reach a conclusion as to when an instrument is incomplete or irregular on its face within the meaning of the section. The use of the two words suggests that each expresses a different idea. The decisions in the cases of Re Philpott, 169 Iowa, 555, 151 N. W. 825, Ann. Cas. 1917B, 839, U. R. & L. S. Co. v. S. C. Co., 117 Wash. 347, 201 P. 21, 19 A. L. R. 506, and Remedial Plan, Inc., v. Ott, 199 Ky. 161, 250 S. W. 825, enable one to generalize as to what is essential in order that an instrument may be complete within the requirement of the...