Farmers' Nat. Bank of Tecumseh v. Mccall
| Decision Date | 18 January 1910 |
| Docket Number | Case Number: 358 |
| Parties | FARMERS' NAT. BANK OF TECUMSEH v. MCCALL. |
| Court | Oklahoma Supreme Court |
¶0 1. BILLS AND NOTES--Negotiability of Note--Stipulation for Attorney Fee in Mortgage. A note negotiable on its face does not become nonnegotiable on account of a stipulation in a mortgage securing the same providing for an attorney's fee in the event of foreclosure.
2. ALTERATION OF INSTRUMENTS--Effect--Contracts in General. The material alteration of a written contract intentionally made by a party entitled to any benefit under it or with his consent extinguishes all the executory obligations of the contract in his favor against all parties who do not consent to the act. Section 1141, Comp. Laws Okla. 1909.
3. CHATTEL MORTGAGES -- Security for Subsequent Note. A note having been executed on November 8, 1905, by M., due at a given time, to B., in the sum of $ 550, secured by a chattel mortgage of that date, and later, on December 19, 1905, a note in the same amount by the same maker to the same payee being executed in order that the later note may be secured by the former chattel mortgage, it must appear that it was agreed by the parties thereto at the time of the execution of said note of December 19th that it should take the place of that of November 8th, and be secured by said chattel mortgage.
4. BILLS AND NOTES--Security for Pre-existing Debt--Rights of Holders--Equities Between Original Parties. The holder of a negotiable instrument as collateral security for a pre-existing indebtedness and an extension thereon retains the same unaffected by equities between the original parties of which it had no notice.
(a) The mortgage securing same is also unaffected by such equities.
5. JURY--Right to Jury Trial--Waiver. Plaintiff and defendant in the trial court having each verbally moved for peremptory instructions, this did not constitute a waiver of the right to have a verdict returned by the jury.
Error from Pottawatomie County Court; E. D. Reasor; Judge.
Action by the Farmers' National Bank of Tecumseh against J. W. McCall. Judgment for defendant, and plaintiff brings error. Reversed for new trial.
B. B. Blakeney and J. H. Maxey, Jr., for plaintiff in error.--Citing: Howry v. Eppinger, 34 Mich. 29; Fancourt v. Thorne, 9 Q. B. 312; First Nat. Bank v. Mining Co. (Colo. App.) 68 P. 981; Kiskadden v. Allen, 7 Colo. 206; Chicago, etc., Co. v. Merchants' Bank, 136 U.S. 268; Dobbins v. Oberman, 17 Neb. 163; Ernst v. Steckman, 74 Pa. St. 13; Wilson v. Campbell, 110 Mich. 580; First Nat. Bank v. Flath (N. D.) 86 N.W. 867; Hamilton v. Fowler, 99 F. 18; Frost v. Fisher (Colo. App.) 58 P. 872; Thorpe v. Mindeman, 123 Wis. 149; City Nat. Bank v. Goodlow, etc., Co., 93 Mo. App. 123; Railway v. Bank, 136 U.S. 268; Carpenter v. Longan, 16 Wall. 271; Owings v. MacKenzie, 133 Mo. 323; Garnet v. Myers, 65 Neb. 280, 94 N.W. 803; Consterdine v. Moore, 65 Neb. 291, 96 N.W. 102; Allen v. Dunn, 71 Neb. 831; Pomroy v. Rice, 16 Pick. 22; Watkins v. Hill, 8 Pick. 522; Williams v. Starr, 5 Wis. 534; Jones v. N.Y. Guar. & Ins. Co., 101 U.S. 622; Mullins v. Clark, 13 Ky. 29; Biglow v. Capen, 145 Mass. 270; McKinster v. Babcock, 26 N.Y. 556; Anderson v. Van Allen, 12 Johns (N.Y.) 343; Renton v. Monnier, 77 Cal. 449; Hackett v. Martin, 8 Greenl. (Me.) 77; Kahoon v. Morgan, 38 Vt. 234; Miller v. Larned, 103 Ill. 562; Mersick v. Alderman, 77 Con. 634; Dunn v. Weston, 71 Me. 270; Farrar v. N.Y. Bank, 90 Ga. 331; Thomas v. Brennan, 104 Wis. 564; Stauff v. Bingenheimer (Wis.) 102 N.W. 694; Pappitz v. Insurance Co., 85 Minn. 118; Minahan v. Grand, etc., Co., 138 F. 37; German Am. Bank v. Cunningham, 89 N.Y.S. 836.
A. B. Honnold, for defendant in error.--Citing: Richardson v. Fellner, 9 Okla. 513; Meyer v. Weber (Cal.) 65 P. 1110; Spesard v. Spesard (Kan.) 88 P. 576; Chick v. Willets, 2 Kan. 377; Round v. Donnel, 5 Kan. 54; Muzzy v. Knight, 8 Kan. 456; Bank v. Peck, 8 Kan. 663; Meyer v. Graeber, 19 Kan. 165; Burnham v. Bank, 92 Wis. 277; Altoona Bank v. Dunn, 151 Pa. St. 228; Pitts v. Foglesong, 37 Ohio St. 676; Potts v. Mayer, 74 N.Y. 594; Comstock v. Hier, 73 N.Y. 269; Loewen v. Forsee, 137 Mo. 29; Keokuk Bank v. Hall, 106 Iowa 540; Thompson v. Maddox, 117 Ala. 468.
¶1 The following questions are raised by this record:
¶2 1. It was uniformly held by the Supreme Court of the territory of Oklahoma that a note containing a stipulation for the payment of an attorney's fee is not negotiable. Randolph v. Hudson, 12 Okla. 516, 74 P. 946; Cotton et al. v. John Deere Plow Co., 14 Okla. 605, 78 P. 321. This rule has been adhered to by this court. Clevenger v. Lewis, 20 Okla. 837, 95 P. 230, 16 L. R. A. (N. S.) 410. The rule, however, has been changed by statute, which, however, does not apply to this case. See act of March 20, 1909 (Sess. Laws Okla. 1909, c. 24, art. 2, § 2, subd. 5, p. 389).
¶3 In the case at bar the note on its face is negotiable, but it is insisted by the defendant in error that the mortgage securing payment of same provides for an attorney's fee in the event of foreclosure and that such provision also shall be construed as included in the note, thereby rendering it nonnegotiable. There is a conflict of authority on this question. The great weight seems, however to be against the contention of defendant in error, supporting the rule that a covenant or mortgage which is framed purely for the purpose of security and for enforcement of which resort could be had only to the property mortgaged and not a part of any debt by virtue of the note, but on account of the terms of the mortgage, the terms and conditions thereof being limited to providing security for the indebtedness, does not affect the negotiability of the note. Thorp v. Mindeman, 123 Wis. 149, 101 N.W. 417, 68 L. R. A. 146, 107 Am. St. Rep. 1003; Frost et al. v. Fisher et ux., 13 Colo. App. 322, 58 P. 872; Morgan v. Martien, 32 Mo. 438; Mason v. Barnard et al., 36 Mo. 384; Thompson v. Field et al., 38 Mo. 320; Owings v. McKenzie et al., 133 Mo. 323, 33 S.W. 802, 40 L. R. A. 154; Wilson v. Campbell, 110 Mich. 580, 68 N.W. 278; 35 L. R. A. 544; Ernst et al. v. Steckman, 74 Pa. 13, 15 Am. Rep. 542; Chicago Ry. Equipment Co. v. Mer. Nat. Bank, 136 U.S. 268, 10 S. Ct. 999, 34 L. Ed. 349.
¶4 The highest courts of California, Michigan, Missouri, North Dakota, Pennsylvania, and Wisconsin have held that a stipulation in a note for an attorney's fee destroys its negotiability. In the first state the court, basing its decision on a statute, also holds that such stipulation in a mortgage to secure a note negotiable on its face renders the same nonnegotiable. Meyer v. Weber, 133 Cal. 681, 65 P. 1110. In this case, however, the decision was rendered by a divided court, four members supporting and three dissenting. In Michigan, the adjudications are not in harmony. In Missouri, North Dakota, Pennsylvania, and Wisconsin the governing rule is contrary to that of California, and harmonizes with the cases of Thorp v. Mindeman and Frost et al. v. Fisher et ux., supra. The Kansas decisions also seem to be in harmony with them. However, when the provisions of the mortgage by direct stipulation in the note are made a part thereof, the same in that event may be rendered nonnegotiable. But that is not now before the court. See Lockrow v. Cline, 4 Kan. App. 716, 46 P. 720; Chapman v. Steiner, 5 Kan. App. 326, 48 P. 607; Wistrand v. Parker, 7 Kan. App. 562, 52 P. 59.
¶5 The adjudications of the highest court in Nebraska also seem to be in accordance with the rule announced above as appearing to be supported by the weight of authority. Garnett v. Meyers, 65 Neb. 280, 94 N.W. 803; Consterdine v. Moore, 65 Neb. 291, 91 N.W. 399, 101 Am. St. Rep. 620; Allen et al. v. Dunn et al., 71 Neb. 831, 99 N.W. 680. See, also, section 3598, Wilson's Rev. & Ann. St. Okla. 1903.
¶6 Eminent authority also supports the rule that a notation on the corner of a note may not render the same nonnegotiable. Howry et al. v. Eppinger et al., 34 Mich. 29; First Nat. Bank v. Mineral Farm Cons. Min. Co., 17 Colo. App. 452, 68 P. 981; Chicago Ry. Equip. Co. v. Mer. Nat. Bank, supra.
¶7 It is further insisted, however, that section 793, Wilson's Rev. & Ann. St. Okla. 1903, which provides, "Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together," concludes this question in favor of the defendant in error. This section was borrowed by the lawmakers of the territory of Oklahoma from the statutes of Dakota Territory. The same statute was retained in force in the state of North Dakota. In the case of First National Bank of St. Thomas v. Flath, 10 N.D. 281, 86 N.W. 867 (section 3900, Rev. Code N. D. 1899), this section was construed and held to constitute a rule of interpretation merely and united several contracts into a single contract only for such purposes, and that a real estate mortgage and the notes secured thereby did not constitute a single contract, but remained as separate...
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