Dille v. Longwell
| Decision Date | 10 March 1920 |
| Docket Number | 31898 |
| Citation | 176 N.W. 619,188 Iowa 606 |
| Parties | JOHN F. DILLE, Appellant, v. O. H. LONGWELL, Appellee |
| Court | Iowa Supreme Court |
Appeal from Polk District Court.--HUBERT UTTERBACK, Judge.
THIS is a suit at law for judgment on a promissory note. The essential defense was that the maturing of the note depended upon a contingency which had not happened. Verdict was directed for defendant, and plaintiff appeals.--Reversed and remanded.
Reversed and remanded.
Nourse & Nourse, for appellant.
Clark & Byers, for appellee.
I.
The note sued on bears a date. While it promises to pay "after date," no time for payment is stated by day month, or year. The promise is to pay after date, "when the present indebtedness of Highland Park Company is paid." The court directed verdict for defendant. By so doing, it held that, as matter of law, the note was not yet due and payable, because the debts referred to in the note had not been paid, and held further that it would never become collectable until said debts were paid.
If we must hold that the note can be collected now, even if said indebtedness still subsists, it will become unnecessary to pass upon whether same has been paid. Therefore, we address ourselves first to the legal effect of the promise in the note, though it be assumed that said debts of the company have not been discharged.
II. In Kiskadden v. Allen, 7 Colo. 206, 3 P. 221, recovery was permitted, though the note had words fully as indefinite as the ones found in the note before us. The same is true of Dobbins v. Oberman, 17 Neb. 163 (22 N.W. 356), of Stevens v. Blunt, 7 Mass. 240, and possibly of other cases relied on by appellant. We prefer to act without regard to these cases, because, while the qualifying words considered in them are as indefinite as is "when the debts of the company are paid," they qualified a definite promise to pay by a stated date (a promise not found in the note before us). And the decisions in these cases turned largely, if not wholly, on the proposition that the qualification could not cancel the definite promise to pay by a stated time.
III. But in Randall v. Johnson, 59 Miss. 317, the promise was to pay in 90 days after the return trip of a certain vessel. This is quite as uncertain and contingent as is a promise by defendant to make payment when the debts of the company had been discharged. The Randall case holds that, though the vessel was lost, payment became due in 90 days after it failed to return within the time usually needed for the return trip. We see no distinction in principle between this and the instant case.
IV. This defendant gave this note in part payment for receiving a controlling interest in the company, and he assumed control and management of that company. In the course of the opinion we shall speak fully on the effect of acquiring this interest and this control. For the present, we have to say that, after defendant got control and management, it became his duty to see to it that the company paid its said indebtedness. This being so, the case stands as if defendant had promised to pay the note when his management brought it about that the debts of the company were paid. Failure to keep promises less definite and binding than this has not been effective to delay maturity.
In the early case of Barnard v. Cushing, 4 Metc. 230, there was a statement:
"We agree not to compel payment for the amount of this note, but to receive the same when convenient for the promisors to pay."
It was held that no action would lie on the promise; but it would seem that this has been practically overruled in Page v. Cook, 164 Mass. 116, 41 N.E. 115. In that last case, the clause was: "On demand after date I promise to pay * * * payable when payor and payee mutually agree." This was held to be a note payable on demand after such agreement was made, or ought in reason to have been made. Speaking to the Barnard case, it is said:
"Possibly, if the question arose now, a different result might be reached from that arrived at in that case."
A like view of the Barnard case seems to be taken in Pistel v. Imperial Mut. L. Ins. Co., 88 Md. 552 (43 L. R. A. 219, 42 A. 210). Certain it is that the trend of the later cases is to hold that agreements to pay when convenient mean that payment is due within a reasonable time after date. That is the holding of the Pistel case, supra. In Works v. Hershey, 35 Iowa 340, at 343, cited by appellee, the promise was that the note should be paid at Cincinnati "when convenient." We held that these words "cannot be construed to nullify the words of the instrument, viz.: 'On demand I promise to pay,'" and that, "if any force be given to them, it will be that the maker bound himself to pay within a reasonable time after the date of the note." That, too, is the decision in Lewis v. Tipton, 10 Ohio St. 88, and the case approves the text in 1 Edwards on Bills, Notes, and Negotiable Instruments (3d Ed.) 154 (Note):
"And it is now adjudged that a note by which the maker promised to pay a certain sum 'when it is convenient' is due within a reasonable time."
The same rule is announced in Benton v. Benton, 78 Kan. 366 (97 P. 378), another case cited by appellee, in speaking to a promise to pay "as soon as he can." It is said this is of the same effect as a promise to pay when it would be convenient, and that a promise to pay "when convenient" is held to be tantamount to an agreement to pay within a reasonable time, upon the theory that otherwise the practical effect would be to give the promisor the option to refuse payment altogether. In Smithers v. Junker, 41 F. 101, the promise was:
"For value received I promise to pay, * * * payable at my convenience, and upon this express condition, that I am to be the sole judge of such convenience and time of payment."
It was held this does not contemplate the money shall become due only at the pleasure of the maker, without regard to lapse of time or the rights of payee, but that the maker is to have a reasonable time, to be determined by himself, in which to pay the note.
Why is a promise that one will pay when it is convenient for him less indefinite and contingent than the promise of a manager that he will pay his own note as soon as he causes the debts of the corporation managed by him to be paid? If a promise to pay when convenient is, in law, a promise to pay within a reasonable time after date, why is not that true of a promise to pay when certain debts have been caused to be paid?
In Cota v. Buck, 48 Mass. 588, the promise was to make payment as soon as the maker could realize the money out of property he had purchased of the payee. In Ubsdell v. Cunningham, 22 Mo. 124, it was to pay as soon as the maker collected from certain accounts described. In Nunez v. Dautel, 86 U.S. 560, 22 L.Ed. 161, payment was to be made "as soon as the crop can be sold or the money raised from any other source." In Crooker v. Holmes, 65 Me. 195, the note was to be paid when the maker sold his place, where he was then living. In Sears v. Wright, 24 Me. 278, and in Goodloe v. Taylor, 3 Hawks 458, the qualifying words made payment depend, respectively, upon the time when the maker sold certain logs, and when a house being built for him was completed. In all of these cases, it was held that the note became payable within a reasonable time after date. Surely, the promise in each of these was as indefinite and contingent as the promise at bar.
V. A naked briefing of these decisions falls far short of meeting the position of the appellee as forcefully as the reasoning which underlies this class of decisions. The underlying reasoning is that such provisions should be construed liberally in favor of the payee (Smithers v. Junker, 41 F. 101), and that, when all the provisions of the instrument are liberally considered together, it is plain there was no intention to agree,--say, that, if the maker did not sell his house, this would cancel his promise to pay,--no intention to agree, in effect, that the promisor had "the option to refuse payment altogether" (Benton v. Benton, 78 Kan. 366 [97 P. 378, at 379]), nor that the maker had the sole right to say "when it would suit his convenience to pay the debt" (Smithers v. Junker, 41 F. 101). And it rules it should be held it was the intention, say, on such qualification as that payment was to be made when the maker sold his house, that he must pay after he had failed to sell his house within a reasonable time.
5-a
Such words of qualification are merely an arrangement that the maker is not to pay immediately, and may delay payment until a reasonable time has elapsed, wherein, say, he can collect certain accounts. The qualification merely "prescribes the time of payment by reference, not to days and years, but to a reasonable time for the collection of the accounts." Ubsdell v. Cunningham, 22 Mo. 124. If payment of a debt is to be made upon the happening of a future event, that is merely an agreement that it will be convenient to make payment when that event occurs, and not an agreement that no payment need be made within a reasonable time, even if such event fails to happen. De Wolfe v. French, 51 Me. 420; Crooker v. Holmes, 65 Me. 195, at 197. To like effect is Lewis v. Tipton, 10 Ohio St. 88, and Nunez v. Dautel, 86 U.S. 560, 22 L.Ed. 161. In that, payment was to be made "as soon as the crop can be sold or the money raised from any other source." And the court held that "the stipulation secured to the defendants a reasonable amount of time within which to procure, in one mode or the other, the means necessary to meet the liability;" and that the debt would become due upon the...
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