Clark v. Skeen

• Decision Date: 10 March 1900
• Docket Number: 10,096
• Citation: 60 P. 327,61 Kan. 526
• Parties: JOHN W. CLARK v. CALVIN J. SKEEN et al
• Court: Kansas Supreme Court

60 P. 327

61 Kan. 526

JOHN W. CLARK v. CALVIN J. SKEEN et al

No. 10,096

Supreme Court of Kansas

March 10, 1900

Decided January, 1900.

Error from Barber district court; G. W. MCKAY, judge.

STATEMENT.

THIS was an action to recover upon a promissory note for $ 3000 and the interest coupons attached thereto, executed by Calvin J. Skeen, Sarah C. Skeen, Garlie Lane, and Myron J. Lane, in favor of the Jarvis-Conklin Mortgage Trust Company, and to foreclose a mortgage on real estate in Barber county, given by the same parties to secure the payment of the note. The following is a copy of the promissory note, omitting signatures and indorsements:

"Five years after date, for value received, we promise to pay to the order of the Jarvis-Conklin Mortgage Trust Company, at its office in Kansas City, Missouri, three thousand ($ 3000) dollars, lawful money of the United States, with interest thereon at the rate of six per cent. per annum, payable semiannually on the first days of January and July, in each year, according to the tenor and effect of the interest notes of even date herewith and hereto attached. Both principal and interest payable with New York exchange. This note is to draw interest from date at the rate of twelve per cent. per annum if either principal or interest remain unpaid ten days after due. At the option of the legal holder, after any of said interest notes remain due and unpaid ten days, the whole of the principal and interest may be declared immediately due and payable. This note is given for an actual loan of the above amount, and is secured by a mortgage deed of even date herewith, which is a first lien on the property therein described. Dated at Kansas City, Mo., July 2, 1888."

The note and interest coupons were duly signed and are alleged to have been indorsed and duly transferred before maturity for a valuable consideration to John W. Clark, the plaintiff in this action. The defendants denied and contested the transfer to and ownership by Clark of the note and mortgage, and also set up a counter-claim for damages alleged to have arisen from the failure of the payee of the note promptly to pay over the proceeds of the loan.

A trial was had with a jury, resulting in a verdict in favor of the defendants. The plaintiff complains, and assigns numerous errors on the rulings made by the trial court.

Judgment reversed.

Beardsley & Gregory, for plaintiff in error.

W. W S. Snoddy, and E. C. Wilcox, for defendants in error.

OPINION

JOHNSTON, J.

In the course of the trial the district court, in ruling on the testimony and instructing the jury, held that the note copied in the foregoing statement is not a negotiable instrument and the determination of this question will dispose of, or render unimportant, a number of other questions discussed by plaintiff in error. The negotiability of the paper appears to have been challenged on two grounds, and the first is that it contains a stipulation that upon default in the payment of interest the whole amount shall become due and then draw a greater rate of interest. Stipulations like these are not inconsistent with negotiability. According to mercantile law, negotiable paper is required to be certain as to time and amount, but the note in question, as will be observed, fixes a certain time for payment, and the fact that it may become due at an earlier time depends upon the maker himself. Stipulations somewhat similar were contained in the notes and mortgages under consideration in Holden v. Clark, 16 Kan. 346, and yet it was held that the paper was negotiable, and that an innocent and bona fide purchaser took the same freed from the equities existing between the original parties.

In Carlon v. Kenealy, 12 Mees & Welsb. 139, it was held that a note payable in installments, subject to a condition that upon default being made in the payment of the first installment the greater amount should become due, is negotiable, and in deciding the case it was said that "almost every note payable in installments has such a condition. It is not a contingency. It depends upon the act of the maker himself, and on his default it becomes a promissory note for the whole amount." In Dobbins v. Oberman, 17 Neb. 163, 22 N.W. 356, the note contained a provision that it should be due at a stated time, and might become due earlier, on the happening of a certain event. The instrument was held negotiable, and in deciding it the court stated: "It matters not, then, that it also contained a promise to pay sooner than the general date of payment, upon the happening of an uncertain event." In Wilson v. Campbell, 110 Mich. 580, 68 N.W. 278, 35 L. R. A. 544, it was held that a note for the payment of a certain sum at a fixed date is not rendered non-negotiable by a provision that it may become due sooner, at the option of the holder, on default in the payment of interest, nor by the fact that a mortgage securing it contains a similar provision in regard to a default in the payment of taxes.

The same question was before the supreme court of the United States in Chicago Railway Co. v. Merchants' Bank, 136 U.S. 268, 10 S.Ct. 999, 34 L.Ed. 349, where it was held that a recital that the note in suit was one of a series, and that in default of payment of any one of the series the note in suit should become due, did not render the note non-negotiable, the same containing a promise to pay at a certain definite date, at which it became due at all events. See, also, De Hass v. Roberts, 59 F. 853; Bank of Battle Creek v. Dean, 86 Iowa 656, 53, 53 N.W. 338 N. W: 338; Walker v. Woollen et al., 54 Ind. 164; Cota v. Buck, 7 Metc. 588; Ernst v. Steckman, 74 Pa. 13; Markey v. Corey, 108 Mich. 184, 66 N.W. 493, 36 L. R. A. 117; Rand. Com. Pap. 114; Dan. Neg. Inst., 4th ed., § 48.

The fact that it was to draw a greater rate of interest after default does not destroy the negotiable quality of the paper. In Parker v. Plymell, 23 Kan. 402, the note contained a promise to pay interest after maturity, but stipulated that if the note was not paid at maturity the same should bear interest at twelve per cent. from date, and it was held that this provision did not render the note non-negotiable. Gilmore v. Hirst, 56 Kan. 626, 44 P. 603, was a case where the note contained a stipulation that if the interest was not paid when due it should become principal and draw eight per cent. interest, and it was held that the stipulation for the payment of interest on interest did not render the note non-negotiable. See, also, De Hass v. Roberts, supra; Hope v. Barker, 112 Mo. 338, 20 S.W. 567.

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