Cedar Rapids National Bank v. Weber

• Decision Date: 22 September 1917
• Docket Number: 31460
• Citation: 164 N.W. 233,180 Iowa 966
• Parties: CEDAR RAPIDS NATIONAL BANK, Appellant, v. PETER WEBER et al., Appellees (14 cases)
• Court: Iowa Supreme Court

164 N.W. 233

180 Iowa 966

CEDAR RAPIDS NATIONAL BANK, Appellant, v. PETER WEBER et al., Appellees (14 cases)

No. 31460

Supreme Court of Iowa, Des Moines

September 22, 1917

Appeal from Mitchell District Court.--C. H. KELLEY, Judge.

APPELLANT brought separate suits in justice of the peace court in Linn County against each of the following named parties: Peter Weber, Fred H. Towner, Nick Wagner, M. C. Lewis, A. F Balsley, Mrs. F. Blonigan, Geo. W. Godfrey, Ben Colton, F. A Bush, Geo. W. Hill, Berte Boughton, and L. W. Andrews, upon the separate note of each. The trial thereof was transferred to Mitchell County, upon the application of defendants, on the ground that there was fraud in the inception of the notes. Action was brought against the defendants Elmo Vining and M. J. Simpson in the district court of Linn County, which was likewise transferred to Mitchell County. The several notes executed by the respective defendants vary to some extent in date and amount, but the form, payee, and place of payment are identical. The portion of the notes material for our consideration upon this appeal is as follows:

"All parties to this note, including sureties, endorsers and guarantors hereby severally waive presentment for payment notice of non-payment and protest, and consent to extensions of time on this note."

The payee named in the notes is the Cedar Rapids Acetylene Company. They are all made payable at the Cedar Rapids National Bank, Cedar Rapids, Iowa, and on the back bear the following indorsement:

"For value received I hereby guarantee the payment of the within note at maturity or at any time thereafter, together with a legal attorney fee if suit be instituted hereon, waiving demand, notice of non-payment and protest.

"Cedar Rapids Acetylene Co.,

"Pr L. S. Wagner."

The defenses urged to each of said notes were; (a) That the same are in form non-negotiable; (b) that their execution was induced by fraud.

The court instructed the jury that each of the notes, except the H. W. Clay note, was non-negotiable, and submitted to the jury the question of fraud in the inception of the notes. The H. W. Clay note was in form negotiable. The jury returned a verdict in favor of all of the defendants except Clay, the verdict being in favor of plaintiff and against him, but was rendered in his favor against the cross-defendants. The cross-defendants were the acetylene gas company and L. S. Wagner, who was the sole proprietor thereof, and who indorsed the notes to appellant. Judgment was rendered in accordance with the verdict of the jury. Plaintiff appeals.

Affirmed.

J. F. Clyde and Tourtellott & Donnelly, for appellant.

F. C. Bush, for cross-defendants.

W. H. Salisbury and J. C. Campbell, for appellees.

STEVENS, J. GAYNOR, C. J., WEAVER and PRESTON, JJ., concur.

OPINION

STEVENS, J.

The question of fraud in the inception of the notes is not argued by counsel for appellant, and reliance is placed upon the following propositions for reversal: (1) That the notes in controversy are negotiable; (2) that there was not sufficient evidence to justify the submission to the jury of the question whether appellant was an innocent holder of said notes; (3) that the defendants Towner and Hill waived their rights to rescind their contract, and the defenses urged to their notes, by the continued use of their gas machines after their right of trial for one year had lapsed; (4) that the court committed error in giving and refusing instructions.

I. We will first dispose of the question of the negotiability of the notes. So far as material to the question presented, our negotiable instrument law is as follows:

"Section 3060-a1. An instrument to be negotiable must conform to the following requirements: * * *

"3. Must be payable on demand or at a fixed or determinable future time.

"Section 3060-a4. An instrument is payable at a determinable future time, within the meaning of this act, which is expressed to be payable:

"1. At a fixed period after date or sight; or

"2. On or before a fixed or determinable future time specified therein; or

"3. On or at a fixed period after the occurrence of a specified event, which is certain to happen, though the time of happening be uncertain.

"An instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect."

It is asserted by appellee that the quoted extract from the notes renders the time of payment thereof uncertain, and therefore destroys the negotiability of the notes. Each of the notes contains the promise to pay the sum named one year after date, so that, in the absence of the provision referred to, the time of payment would be indefinite. There is apparently some confusion and want of harmony in the decisions in different jurisdictions as to the effect of identical or similar clauses in notes. The attempt to have a uniform negotiable instrument law throughout the states has not met, apparently, with complete success. The following language, "The makers and indorsers of this obligation further expressly agree that the payee, or his assigns, may extend the time of payment thereof from time to time indefinitely as he or they may see fit," was held, in Woodbury v. Roberts, 59 Iowa 348, 13 N.W. 312, to render the time of payment uncertain, and the note non-negotiable.

In Farmer v. Bank of Graettinger, 130 Iowa 467, 107 N.W. 170, it was held that a note containing the following provision was negotiable:

"Sureties hereby consent that time of payment may be extended from time to time without notice thereof."

In State Bank of Halstad v. Bilstad, 162 Iowa 433, notes containing the following language, "It is agreed that if crop on Secs. 25 and 26, Twp. 145-48, is below 8 bushels per acre (for 1905 as to one and 1907 as to the other), this note shall be extended one year," were negotiable. In the latter case, the court said:

"We have given this question a good deal of time and study, and have examined a great many cases bearing upon the question involved, and we have not found a single case, nor have we been cited to one, where it is held that an agreement to extend the time of payment to a certain date destroys the negotiability of the instrument. There are many cases holding that an agreement to extend the time indefinitely renders the note non-negotiable, but they are not applicable to the facts here. On the other hand, there are a number of cases holding to the contrary doctrine"--citing First Nat. Bank v. Buttery, (N. D.) 116 N.W. 341, and Randolph on Commercial Paper, Sections 111, 112 and 113.

In Farmer v. Bank of Graettinger, supra, the court said:

"There was no uncertainty as to the payee, the amount, or the time of payment. We may concede that in the case of an instrument providing in terms for extension of time of payment indefinitely, there is such uncertainty as to make the same non-negotiable. And such are the cases of Miller v. Poage, 56 Iowa 96, 8 N.W. 799, and Woodbury v. Roberts, 59 Iowa 348, 13 N.W. 312, cited and relied upon by counsel. But in the notes before us, we have a distinct and unqualified agreement on the part of the makers to pay on a certain date. And we perceive no good reason for holding that the negotiable character thereof is destroyed because of a clause embodied therein providing that a surety, if such there shall be, will not claim a release from his collateral liability on the instrument, if, forsooth, an extension of time shall be granted the makers without notice to him."

We will now examine a few decisions from other jurisdictions. In the following cases the language quoted was held to render the time of payment uncertain and the notes non-negotiable:

"The payee or his assigns may extend the time of payment thereof from time to time, indefinitely, as he * * * may see fit." Glidden v. Henry, (Ind.) 1 N.E. 369.

"Without notice, the payee or holder may extend the time of payment of the principal." Rosenthal v. Rambo, (Ind.) 76 N.E. 404.

"This note is given for advancements, and it is the understanding it will be renewed at maturity." Citizens Nat. Bank v. Piollet, (Pa.) 17 A. 603.

"The payee or holder of this note may renew or extend the time of payment of the same from time to time as often as required without notice, and without prejudice to the rights of such payee or holder to enforce payment against the makers, sureties, and indorsers, and each of them, parties hereto, at any time when the same may be due and payable." Second Nat. Bank v. Wheeler, (Mich.) 42 N.W. 963.

An agreement to extend the time of payment to a time certain has been held not to affect the negotiability of the note. Anniston Loan & Trust Co. v. Stickney, (Ala.) 19 So. 63, and State Bank of Halstad v. Bilstad, supra.

In the following cases, the time of payment was held uncertain because of the consent of the drawers and indorsers that the holder might extend the time of payment without notice, and the notes, therefore, non-negotiable: Matchett v. Anderson Foundry & Machine Works, (Ind.) 64 N.E. 229; Merchants' & Mechanics' Sav. Bank v. Fraze, (Ind.) 36 N.E. 378; Evans v. Odem, (Ind.) 65 N.E. 755; Oyler v. McMurray, (Ind.) 34 N.E. 1004.

In the following cases, in which the language employed was similar the notes were held negotiable; First Nat. Bank v. Buttery, (N. Dak.) 116 N.W. 341; Stitzel v. Miller, (Ill.) 95 N.E. 53; First...