Brown v. Cow Creek Sheep Company

• Decision Date: 07 October 1912
• Docket Number: 689
• Parties: BROWN v. COW CREEK SHEEP COMPANY
• Court: Wyoming Supreme Court

126 P. 886

21 Wyo. 1

BROWN v. COW CREEK SHEEP COMPANY

No. 689

Supreme Court of Wyoming

October 7, 1912

ERROR to the District Court, Carbon County; HON. DAVID H. CRAIG Judge.

The action was by Ed Brown against the Cow Creek Sheep Company upon a check signed in the name of the company for the sum of $ 2,500. A general demurrer to the petition was sustained and the plaintiff elected to stand upon the petition as filed. Judgment was rendered for the defendant for costs. The plaintiff brought error. The material facts are stated in the opinion.

Judgment reversed and cause remanded.

N. R Greenfield, for plaintiff in error.

Under the Negotiable Instruments Act (Comp. Stat. 1910, Secs. 3159, 3161), an indication of a particular fund out of which reimbursement is to be made, or a particular account which is to be debited with the amount does not render the instrument conditional or non-negotiable. The distinction made by the decisions and by the Negotiable Instruments Act between instruments payable out of a particular fund and those which refer to such fund for reimbursement is close, but logically sound. It is clear that an instrument payable out of a particular fund is not payable "in any event," but depends for payment on the existence of the fund, and its sufficiency at the time fixed for payment. The true test is: Does the instrument carry the general personal credit of the drawer or maker, or only the credit of a particular fund? (4 Ency. L. (2nd Ed.) 89.) The check in controversy imports on its face a personal indebtedness in the sum named from the Cow Creek Sheep Company to Ed Brown, and is an absolute direction to the bank to pay that sum to Brown, or his order, at all events, without condition or limitation. It is drawn upon the general personal credit of the company, and not upon the credit of a particular fund, and it is not conditioned upon the sufficiency of any fund. In this state, where a large amount of business is transacted by agents of corporations upon the open range in dealing with live stock, checks of this character are almost invariably used, not for the purpose of designating a particular fund for payment, but that the principal may be advised from an inspection of the check of the transaction giving rise to the debt, and thereby enabled to make proper charges and credits upon the books. All such checks are drawn upon the general fund of the drawer on deposit at the bank. It is desirable and necessary that checks given upon the open range should be negotiable and have all the attributes of negotiable paper. The rule defining the requisites of negotiable instruments, though now declared by statute, is subject to a reasonable construction. It requires a strained construction and interpretation of the check in question to say that it is drawn upon a particular fund. The notation on the check is for the benefit of the drawer and not for the benefit or protection of the bank. The bank is fully protected upon paying such a check whether the principal is indebted to the payee named in the check or not. The check itself imports such indebtedness.

The memorandum upon this check stating that it may not be paid unless object for which drawn is stated, does not affect the character of the instrument. The "object" for which the check is drawn must be stated in all instances. The object of the present check was the payment of the amount named by the bank to the plaintiff out of the general fund or credit of the drawer at the bank. If that is not so, and it was necessary that there be some other statement of the object, then the words "For Wilkes" were sufficient as a statement of such object. The following cases support the contention that the instrument sued upon is negotiable: Bank v. Lightner, 74 Kan. 736, 88 P. 59; 118 Am. St. 353; 8 L. R. A. (N. S.) 231; Schmittler v. Simon, 101 N.Y. 554, 5 N.E. 425, 54 Am. Rep. 737; Corbett v. Clark, 45 Wis. 403, 30 Am. Rep. 763; Hibbs v. Brown, 190 N.Y. 167, 82 N.E. 1108; Siegel v. Bank, 131 Ill. 569, 23 N.E. 417, 19 Am. St. Rep. 51, 7 L. R. A. 537; Buchanan v. Wren, 10 Tex. Civ. App. 560, 30 S.W. 1077; Kirk v. Ins. Co., 39 Wis. 138, 20 Am. Rep. 39; Newton Wagon Co. v. Diers, 10 Neb. 284, 4 N.W. 995; Bank v. Michael, 96 N.C. 53, 1 S.E. 855; Taylor v. Curry, 109 Mass. 36, 12 Am. Rep. 661; Collins v. Bradbury, 64 Me. 37.

If it should be conceded that the check is not negotiable, nevertheless the petition states sufficient facts. (Comp. Stat. 1910, Sec. 4406; Frontier Supply Co. v. Loveland, 15 Wyo. 317; Sargent v. R. R. Co., 32 O. St. 449; Prindle v. Caruthers, 15 N.Y. 425; Swan's Pl. & Prac., pp. 184, 186; Scrock v. Schneider, 29 O. St. 499; 1 Bates' P. P. & F. 203-206; 2 id. 1052, 1051-1075; Gage v. Roberts, 12 Neb. 276, 11 N.W. 306; Stubendorf v. Sonnenschein, 11 Neb. 237, 9 N.W. 91; Collinwood v. Merchants Bank, 15 Neb. 118, 17 N.W. 359; Barnes v. Van Keuren, 31 Neb. 165, 47 N.W. 848; Scott v. Esterbrooks, 6 S.D. 253, 60 N.W. 850; Watson v. Barr, 37 S.C. 463, 16 S.E. 188; Strunk v. Smith, 36 Wis. 631; Dugan v. Campbell, 1 Ohio 119.)

George E. Brimmer, for defendant in error.

It is conceded that it is the general custom of sheep corporations in this section of the country to have orders issued by their agents in the form employed by the defendant company, for the purpose of advising the principal of the transaction giving rise to the order upon a mere inspection of it. The form having been prepared for that purpose, it is manifest that the memoranda upon the order does not state the transaction giving rise to the debt, and does not enable the principal to debit a particular account with the amount. Whenever the payment of a check or order is based upon a condition or contingency it is not negotiable. The cases cited by counsel for plaintiff in error as supporting his proposition that the check is negotiable are not applicable for the reason that the instrument considered was much different from that in the case at bar. Where the instrument upon which suit is brought provides for payment upon a contingency which may never happen, Section 4406 does not apply.

A petition upon an instrument not negotiable must aver consideration. (Bank v. Cable, (Conn.) 48 A. 428; 8 Cyc. 110; 3 Ency. Forms, 4090; 1 Abbott's Tr. Br. on Pl. 332.) A petition upon an instrument which is payable out of a particular fund must aver the existence of the fund. (Thompson v. Merc. Co., 10 Wyo. 86; 8 Cyc. 136.) The order sued upon required payment out of a particular fund. (Thompson v. Merc. Co., supra; 4 Ency. L. (2nd Ed.) 87, 88, 89 and notes; Woodward v. Smith, (Wis.) 80 N.W. 440; Ehrichs v. DeMill, 75 N.Y. 370; Munger v. Shannon, 61 N.Y. 251; 11 Eng. & Am. Ann. Cas. 601-603.)

It was intended by the direction upon the check that the object must be stated to make it obligatory upon the agent signing the check to definitely set forth the particular purpose for which the order was drawn, so that payment might be refused by the bank in the event that the order was not drawn for company purposes, and to indicate to the bank the fund from which payment should be made. By implication, if not expressly, this order states that it was given to pay money owing or coming to John Wilkes. Unless the amount was owing to Wilkes, the order would not be payable, even though it had been accepted generally.

The check was based upon a contingency or condition, and is, therefore, not negotiable. (White v. Cushing, (Me.) 34 A. 164; Benedict v. Cowden, 49 N.Y. 396; Bank v. McCord, (Pa.) 21 A. 143; Stebbins v. R. R. Co., 2 Wyo. 71.) With reference to the direction upon the check for stating the object, see 1 Daniel Neg. Instr. (4th Ed.), Secs. 149, 150. The order was conditional upon a compliance by the drawer with the absolute requirements of the direction upon the check. Without such compliance the order was incomplete and uncertain, and the words "For Wilkes" instead of stating the object, merely indicated a special fund for payment.

POTTER, JUSTICE. BEARD, C. J., and SCOTT, J., concur.

OPINION

POTTER, JUSTICE.

In the District Court a general demurrer to the petition filed in this case was sustained, and an exception was taken to that ruling. Thereupon, the plaintiff not desiring to further plead, but electing to stand upon the petition as filed, judgment was rendered in favor of the defendant for costs. The plaintiff brings the case here on error, assigning as error the ruling upon the demurrer and the entering of judgment for the defendant thereon.

The action was brought upon a check by the plaintiff as the payee named therein against the defendant as the drawer thereof. The petition alleges that the defendant is a corporation organized and existing under the laws of the State of Wyoming; that on the 23rd day of January, 1909, the defendant, by John Wilkes, its authorized agent, drew and delivered to the plaintiff a check in writing of that date, of which the following is a copy, with all credits and endorsements thereon:

No. 81.

FIRST NATIONAL BANK

RAWLINS, WYO., Jan. 23, 1909.

Pay to the order of Ed Brown $ 2,500 00/00 twenty-five hundred dollars.

For Wilkes.

COW CREEK SHEEP COMPANY.

By JOHN WILKES.

This check may not be paid unless object for which drawn is stated.

Following the copy of the check thus set out in the petition, it is alleged that the check was duly endorsed by plaintiff, and so endorsed was by plaintiff duly presented to the said First National Bank of Rawlins, Wyoming, for payment, but was not paid for the reason that the defendant countermanded the payment thereof and instructed said bank not to pay or honor said check; that "plaintiff is still the holder and owner of said check and no part thereof has been paid, and there is now due the plaintiff thereon from the defendant the sum of...