Bradley v. Buffington
| Decision Date | 01 October 1973 |
| Docket Number | No. KCD,KCD |
| Citation | 500 S.W.2d 314 |
| Parties | Thelma B. BRADLEY, Plaintiff-Respondent, v. Eddie BUFFINGTON and Mozelle Buffington, Defendants-Appellants. 26169. |
| Court | Missouri Court of Appeals |
Scott O. Wright, Brown, Wright & Willbrand, Columbia, for defendants-appellants.
Carl F. Sapp, Sapp, Woods, Dannov & Orr, Columbia, for plaintiff-respondent.
Before DIXON, C.J., and PRITCHARD and SOMERVILLE, JJ.
This is an action for judgment on a note and foreclosure of a chattel mortgage securing the note. The note and chattel mortgage were executed comtemporaneously by Eddie Buffington and Mozelle Buffington (hereinafter referred to as defendants) on March 19, 1964, and ran in favor of A. M. Bradley and Thelma B. Bradley, husband and wife. A. M. Bradley died August 22, 1968, and Thelma B. Bradley (hereinafter referred to as plaintiff) filed this action September 17, 1969.
A. M. Bradley prepared the note and chattel mortgage and submitted both to defendants for execution. The note recited that the principal sum constituted a loan '. . . for the purchase of standing timber and for the operation of the Eddie Buffington Stave Mill . . .'. In her petition, plaintiff alleged 'default has been made upon the payment of said note according to its terms and provisions and due demand has been made upon the defendants for the payment of said note.' Defendants, during the course of their pleadings, after trial motions and on appeal, have consistently maintained that they were not in default in making payment according to the terms of said note and that no evidence was introduced to prove they were in default. Defendants' position is equivalent to contending that the note had not reached maturity, therefore no legal right to bring this action for judgment on the note and foreclosure of the chattel mortgage existed. Plaintiff, on the other hand, during the course of trial and on appeal, maintained the note was a demand note and demand for payment had been made on January 20, 1966, which was unavailing.
A jury was waived and trial by court ensued on December 22, 1971. On January 12 1972, judgment in favor of plaintiff was entered in the sum of $18,622.66 (representing $14,000.00 principal plus interest thereon at the rate of five and one-half percent per annum from January 20, 1966); the judgment further provided that the property described in the chattel mortgage be levied against and sold by the sheriff to satisfy the judgment, and that general execution issue in favor of the plaintiff for any deficiency. From this judgment, defendants perfected their appeal.
Appellate review of this action is de novo upon the law and the evidence, deferring to the trial court's findings as to controverted factual matters involving the credibility of witnesses, and the judgment of the trial court will not be disturbed unless it is clearly erroneous. Rule 73.01(d), V.A.M.R.; Independence Flying Service, Inc. v. Ailshire, 409 S.W.2d l28 (Mo.1966); Norman v. Durham, 380 S.W.2d 296 (Mo.1964).
The various contentions of the parties on appeal go begging absent judicial construction Inc. v. Ailshire, 409 S.W.2d 628 (Mo.1966); making it necessary to prescind the note and chattel mortgage before addressing the issues on appeal.
The note, far from being perspicuous, reads as follows:
'PROMISSORY NOTE
$14,000.00
As follows after date, we promise to pay to the order of A. M. BRADLEY and THELMA B. BRADLEY, husband and wife, FOURTEEN THOUSAND AND NO/100 ... DOLLARS
For value received negotiable and payable without defalcation or discount and with interest as hereinbelow set out.
The above money is being loaned for the purchase of standing timber and for the operation of the Eddie Buffington Stave Mill, located in Centralia, Missouri. The makers of this note are to pay 2% of Gross Sales to the holder of this note each 30 days. The holder of this note is to have a Chattel Mortgage on stave mill equipment listed in the Chattel Mortgage.
If for any reason the stave mill is not operating for a period of 120 days, the makers of this note agree to pay the holder of this note 5 1/2% interest on the unpaid principal balance.
Beginning the second year, the makers of this note have the privilege of paying one-fourth back in any calendar year after that time.
The makers of this note do not have the privilege of assigning this note, and any time a sale is made of either the mill or the standing timber to anyone else, this note becomes immediately due and payable.
(s/d) Eddie Buffington
(s/d) Mozelle Buffington
Mozelle Buffington'
The chattel mortgage, separate from the note, but executed contemporaneously with it, specifically referred to the note and relative thereto provided, 'And in case default be made in the payment of the debt abovementioned or any part thereof, or of the interest due thereon, on any day when the same ought to be paid, then the whole sum shall at the election of the said A. M. Bradley and Thelma B. Bradley, his wife, become immediately due and payable.' Also apropos of this action, the chattel mortgage additionally provided that default in payment of the note constitutes a basis for foreclosure.
The Uniform Negotiable Instruments Act, Chapter 401, RSMo 1959, V.A.M.S. bears initially on construction of the note since it was executed March 19, 1964, a date prior to July 1, 1965, the effective date of the Uniform Commercial Code (L.1963, p. 637, § 10--102). In the context of the Uniform Negotiable Instruments Act, is the note negotiable or non-negotiable? Resolve of this basic question is the genesis for construction of the note. Section 401.001(3) RSMo 1959, V.A.M.S., requires that a note 'Must be payable on demand or at a fixed or determinable future time;' in order to be negotiable. Section 401.004, subd. 2, RSMo 1959, V.A.M.S., provides, 'An instrument payable upon a contingency is not negotiable and the happening of the event does not cure the defect.' The note in question recites that it is payable as 'hereinafter set out'. Next, after a recitation as to the purpose of the loan, the following language appears, 'The makers of this note are to pay 2% of Gross Sales to the holder of this note each 30 days'. This language standing alone, and even more so when read in conjunction with all other language contained in the note, patently discloses the intent of the parties to be that the principal of the note was payable in installments, the amount of each principal installment mathematically arrived at by calculating 2% of gross sales, if any, generated during successive thirty day periods. The reference to '2% of Gross Sales' is not subject to the construction of constituting the rate of interest to be borne by the principal or designating a particular fund out of which the principal installments are payable. Defendants' 'promise to pay', viz, '2% of Gross Sales - - - each 30 days' was neither 'payable on demand' nor 'at a fixed or determinable future time' as required and defined in Section 401.001(3) RSMo 1959, V.A.M.S. At best, the 'promise to pay' was subject to a series of contingencies, 30 day periods during which the stave mill generated gross sales, the occurrence and amounts of which were uncertain, and, therefore, not payable 'at a fixed or determinable future time', thus excluding negotiability by virtue of Sections 401.001(3) and 401.004, subd. 2, RSMo 1959, V.A.M.S. Mitchell v. Health Culture Co., 349 Mo. 475, 162 S.W.2d 233 (1942) and Bank of Evansville v. Kurth, 167 Wis. 43, 166 N.W. 658 (1918). Plaintiff contends the note must be construed as a demand note since Section 401.007, subd. 1(2) RSMo 1959, V.A.M.S., provides a note is payable on demand 'when no time for payment is expressed'. This contention is, at best, specious, and is rejected. The note expressed a time for payment, even though it was neither 'payable on demand' or 'at a fixed or determinable future time'. Adoption of plaintiff's postulate would nullify the intent of the parties to provide for principal payments in mathematically calculable installments.
Having ruled the note to be a non-negotiable instrument, it is necessary to turn to general rules of construction applicable to contracts to ascertain the additional and encompassing intent of the parties, since the Uniform Negotiable Instruments Act does not apply to or affect the rights or liabilities of parties with respect to non-negotiable instruments. First Nat. Bank of Kansas City v. Produce Exchange Bank of Kansas City, 338 Mo. 91, 89 S.W.2d 33 (1935). Intent is gleaned from the four corners of the instrument and disclosed by the language used as contradistinguished from any secret intent. Paisley v. Lucas, 346 Mo. 827, 143 S.W.2d 262 (1940); Bay v. Stout Sign Company, 301 S.W.2d 786 (Mo.1957); Kerrick v. Schoenberg, 328 S.W.2d 595 (Mo.1959); and Monterosso v. St. Louis Globe-Democrat Publishing Co., 368 S.W.2d 481 (Mo.1963). Four ancillary rules of construction are pertinent: (1) two instruments executed contemporaneously, as part of the same...
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