Culbertson v. Nelson
| Decision Date | 15 January 1895 |
| Citation | 61 N.W. 854,93 Iowa 187 |
| Parties | CULBERTSON v. NELSON. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from superior court of Council Bluffs; J. E. F. McGee, Judge.
Action at law upon an accepted bill of exchange. Defense, want of consideration, fraud in the inception of the bill, and alteration thereof after delivery. The case was tried to the court without a jury, and judgment rendered for defendant. Plaintiff appeals. Affirmed.Flickinger Bros. and McCrary & Craig, for appellant.
Wherry & Walker and Wright & Baldwin, for appellee.
This is another case where the unsuspecting has been imposed upon by the patent-right swindler, and, in its facts, is somewhat similar to the case of Bank v. Zeims (decided at October term) 61 N. W. 483. In this case the patent was on a water heater or feed cooker, and in the Zeims Case it was on a fence. The lower court made a finding of facts from which he drew certain conclusions of law, which were as follows:
The following is a copy of the draft upon which the action is predicated:
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¦ ¦Thomas E. Hall, Business Manager.¦No. 10,062. ¦
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¦Dec. 9, 1889. ¦Hall & Company. ¦Kansas City, Mo. ¦
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¦Accepted and ¦ ¦Willits, Ia., Dec. 9, 1889.¦
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¦ ¦October first, after date, pay to the order of ¦
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¦payable at ¦ ¦ ¦
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¦ ¦Thomas E. Hall nine hundred dollars ($900), with ¦
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¦Council Bluffs,¦exchange, and eight per cent. interest from date, if ¦
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¦Ia. ¦not paid when due. Value received, and charge to ¦
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¦ ¦the account of ¦
+---------------+-------------------------------------------------------------¦
¦John Nelson. ¦ ¦ ¦
+---------------+---------------------------------+---------------------------¦
¦ ¦To John Nelson, ¦Hall & Co., ¦
+---------------+---------------------------------+---------------------------¦
¦ ¦Willits, Iowa. ¦By Thos. E. Hall. ¦
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There was ample testimony to sustain the findings of the court below that the draft was obtained through fraud and misrepresentation, and was and is wholly without consideration. Indeed, counsel do not challenge these findings. The error of the court, if any, is in his conclusions of law. The appellantcontends that the draft is a negotiable instrument, and is not subject to the defenses lodged against it in the hands of a bona fide holder; while the appellee insists that it is not negotiable, and therefore subject to these defenses, because of uncertainty in the amount to be paid, for that it includes “exchange.” It is to be regretted that this question, which is of so much moment to the business interests of the country, is in so unsettled a condition. If there is any branch of the law which should be reduced to a certainty, it is that relating to commercial paper. After long usage, the custom of traders finally ripened into the law merchant, and this law gave to notes and bills of exchange their present character, in which they, in a sense, become part of the circulating medium of the whole country; and it is exceedingly important that state lines do not mar the symmetry of the rules governing such paper. However, we find the question presented has been variously decided by the different courts of the country; and, if there is anything at present uncertain, it is the negotiability of such an instrument. The following cases affirm the negotiability of such paper: Smith v. Kendall, 9 Mich. 242;Johnson v. Frisbie, 15 Mich. 286;Leggett v. Jones, 10 Wis. 35;Morgan v. Edwards, 53 Wis. 599, 11 N. W. 21; Bradley v. Lill, 4 Biss. 473, Fed. Cas. No. 1,783; Price v. Teal, 4 McLean, 201, Fed. Cas. No. 11,417; Whittle v. Bank (Tex. Civ. App.) 26 S. W. 1106;Hastings v. Thompson (Minn.) 55 N. W. 968; Grutacup v. Woulluise, 2 McLean, 581, Fed. Cas. No. 5,854. On the other side of this question are the following cases: Lowe v. Bliss, 24 Ill. 168;Read v. McNulty, 12 Rich. Law, 445;Bank v. Strother, 28 S. C. 504, 6 S. E. 313; Palmer v. Fahnestock, 9 U. C. C. P. 172; Saxton v. Stevenson, 23 U. C. C. P. 503; Bank v. Newkirk, 2 Miles, 442; Bank v. Bynum, 84 N. C. 24;Russell v. Russell, 1 MacArthur, 263;Fitzharris v. Leggatt, 10 Mo. App. 529;Hughitt v. Johnson, 28 Fed. 865;Bank v. McMahon, 38 Fed. 283;Flagg v. School Dist. (N. D.) 58 N. W. 499;Bank v. Goode, 44 Mo. App. 129; Caset v. Kirk, 4 Allen (N. B.) 543; Nash v. Gibbon, Id. 479. Turning to the text writers, we find that Randolph, in his work on Commercial Paper, at section 200; Daniel, in his treatise on Negotiable Instruments, at section 54; and Tiedman on Commercial Paper, at section 280,--affirm the negotiability of such papers; while Benjamin's Chalmers on Bills and Notes, at page 18; Parsons on Notes and Bills, at page 38; and perhaps others,--deny it. Some of the cases cited relate more particularly to the question as to whether instruments in form of promissory notes, with such a stipulation, are promissory notes under the statute of Anne (1705), or not, and some of them to the negotiability of such instruments. The only English case we have been able to find, having any bearing upon the case, is Pollard v. Herries, 3 Bos. & P. 335, where an instrument “payable in Paris, or, at choice of bearer, at Union Bank in Dover, or at payee's usual place of residence in London, according to the course of exchange upon Paris,” was declared on, and treated as a promissory note. Here is most deplorable uncertainty. Probably, the greater number of cases deny the negotiability of such instruments. And, if the weight of authority were to be determined by the number of cases, no doubt it would be found to be on the negative side of the question. But such is not the true method of determining the preponderance. It becomes our duty, then, to try and untangle this maze, and solve the puzzle upon principle, in the light of the better-reasoned cases.
“A bill of exchange is an open letter by one person to a second, directing him, in effect, to pay absolutely, and at all events, a certain sum of money, therein named, to a third person, or to any other to whom that third person may order it to be paid; or it may be payable to bearer, and to the drawer himself.” Daniel, Neg. Inst. § 27. And it is among the fundamentals that such an instrument must be certain as an engagement to pay, as to fact of payment, amount to be paid, and must be for payment of money only. One of the most essential elements in it is that it must be certain as to the amount to be paid. And this certainty must appear upon the face of the paper, and not from anything dehors the instrument. The maxim, “Id certum est quod certum reddi potest,” does not apply, except the certainty required may be ascertained from the face of the paper. With these rules as our own guide, we think the agreement to pay a certain sum at a particular place, when the acceptor lives at a different one, “with exchange,” introduces an uncertainty as to the amount to be paid, which destroys the character and negotiability of the instrument as a bill of exchange. If it were true that there was at all times a certain, definite, and unchangeable rate of exchange, then there would probably be no uncertainty in the instrument. But it is a fact well known to the business world that there is no such fixed and unchangeable rate. Indeed, the rate charged for exchange is ofttimes a financial barometer, indicative of the state of the money market. He who was an observer of the financial world during the year 1893 could not have failed to observe the varying rates charged for exchange during the panic which was upon us at that time. Moreover, it is well known that rates of exchange vary in the different localities, and ofttimes in the same locality. Here, then, an element of uncertainty is introduced into this bill of exchange, and the amount to be paid by the...
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Nicely v. The Winnebago National Bank of Rockford
...28 S.C. 504, 6 S.E. 313; Fitzharris v. Leggatt, 10 Mo.App. 527; Nicely v. Bank, 15 Ind.App. 563, 44 N.E. 572. Recurring to Culbertson v. Nelson, supra, reviewing the cases and discussing the principle under consideration, Deemer, J., speaking for the court, said: "It is among the fundamenta......
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Nicely v. Winnebago Nat. Bank of Rockford
...the amount to be paid at the maturity of the paper. It is exchange, and what that exchange will be no one can tell.” Culbertson v. Nelson (Iowa) 61 N. W. 854, is one of the leading cases upon the subject under consideration. Many authorities are collected and cited, and ably reviewed, and t......
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