American Natioanl Bank v. Sprague

• Decision Date: 01 March 1884
• Citation: 14 R.I. 410
• Court: Rhode Island Supreme Court
• Parties: AMERICAN NATIONAL BANK v. A. & W. SPRAGUE.

14 R.I. 410

AMERICAN NATIONAL BANK v. A. & W. SPRAGUE.

Supreme Court of Rhode Island.

March 1, 1884

A promissory note bore upon its face a statement that it was issued as collateral to the makers' draft accepted by a third party. In an action against the indorsers of this note in their character of indorsers:

Held, that the undertaking of the makers was a contingent one; that the amount due on the note at its maturity was uncertain; that the note was not negotiable; and that the indorsers, as indorsers, were not liable.

DEFENDANTS' petition for a new trial.

Thomas A. Jenckes, for plaintiff.

Roger A. Pryor & Andrew B. Patton, for defendant.

TILLINGHAST J.

This is an action by the indorsee against the indorsers only, of the notes declared on. In this case there was proof of demand and notice with protest, in the usual form.

The grounds relied upon by the defendants in their petition for a new trial in this case are: first, that the notes are not negotiable; second, that they were collateral security for certain drafts specified in the notes, and possible payments on the principal made the amount due by the notes uncertain, and destroyed their negotiability; third, that the court erred in excluding evidence of the rate of discount by the plaintiff i. e. of usury, and evidence of the law of New York the paper being invalid under that law; and, fourth that it being essential to the validity of the notes that Chafee had authority to issue them, it was error to exclude the trust mortgage offered in evidence by the defendants, to prove the limits of his authority.

The case which the plaintiff makes upon the record, and upon which the proceedings thus far have been had, is that of an indorsee against indorsers only. The notes sued on are in the following form, which is a copy of one of said notes:

F. No. 1319. $5,000.

PROVIDENCE, November 1st, 1873.

Secured by Mortgages.

Three years from January 1st, 1874, for value received, the A. & W. Sprague Manufacturing Company promise to pay to the order of A. & W. Sprague Five Thousand Dollars, with interest from January 1st, 1874, payable semiannually at the rate of seven and three tenths per cent. per annum, till said principal sum is paid, whether at or after maturity; and all instalments of interest in arrear shall bear interest at the rate aforesaid till paid, but reserving the right to pay this note before maturity in instalments of not less than five (5) per cent. of the principal thereof, at any time the semiannual interest becomes payable. Principal and interest payable at their place of business in said Providence.

AMASA SPRAGUE,

Countersigned,

Treasurer.

Z. CHAFEE, Trustee.

Issued as collateral to A. &...