First Nat. Bank v. Sullivan

• Decision Date: 26 December 1911
• Citation: 119 P. 820,66 Wash. 375
• Parties: FIRST NAT. BANK OF SNOHOMISH v. SULLIVAN et al.
• Court: Washington Supreme Court

119 P. 820

66 Wash. 375

FIRST NAT. BANK OF SNOHOMISH v. SULLIVAN et al.

Supreme Court of Washington

December 26, 1911

Department 2. Appeal from Superior Court, Snohomish County; W. W. Black Judge.

Action by the First National Bank of Snohomish against J. E Sullivan and others. Judgment for plaintiff, and defendants appeal. Affirmed.

G. W. Hinman, for appellants.

Coleman Fogarty & Anderson, for respondent.

ELLIS J.

The respondents, as indorsee and holder, sued the appellants, as makers of a promissory note, which, with the indorsements thereon, was as follows:

'$400.00 Snohomish, Wash., Apr. 25, 1908.

'On demand, after date, for value received I (we) promise to pay to the order of Springfield Shingle Co., at the First National Bank in the city of Snohomish, the sum of four hundred no-100 dollars will interest thereon at the rate of 8 per cent. per annum from date until paid. The interest shall be paid at the expiration of every _____, and if default be made in the payment of any installment of interest when the same shall became due, then the whole of this note, both principal and interest, shall forthwith become due and payable without demand. Both principal and interest payable in United States gold coin of the present standard of weight and fineness. If suit shall be commenced for the recovery of any amount due upon this note, I agree to pay a counsel fee of _____ per cent. upon the amount which may be found due, and the whole of the judgment in such suit including attorney's fees and costs of suit, shall bear interest at the rate of _____ per cent. per annum from its date until paid, and it may be so provided in said judgment.

'The maker and all indorsers hereof, and each and every party to this note severally waive presentation and demand for payment protest and notice of protest, and notice of nonpayment of this note.

'This note is given to take up the freight and rehandling of N. P. Car 43607 and proceeds from resale of said car shall apply on this note No. 22438.'

'Sullivan Bros.,

'By H. W. Sullivan.

'H. J. Sullivan.

Indorsed: Springfield Shingle Co., by H. E. Gampp, Sec'y. Paid on Acc't Nov. 17, 1908, $200.00. Interest paid to Dec. 25, 1908, $19.68.'

The answer admitted the execution of the note, the payment of the amounts indorsed thereon, denied that there was any balance due, and set up an affirmative defense in the nature of a counterclaim to the effect that, prior to the making of the note, the appellants sold to the Springfield Shingle Company, payee, certain shingles under an agreement that they were to receive from that company 62 1/2 cents for every 100 pounds of underweight, and were to pay to the shingle company a like amount per hundred for overweights. There was a further allegation that the underweights exceeded the overweights by $537.34, which amount has never been paid by the Springfield Shingle Company to the appellants. The cause was tried to the court without a jury. The court, holding that the note was negotiable, refused to admit evidence in support of the counterclaim, and upon sufficient findings of fact and conclusions of law entered judgment in favor of the respondent. From that judgment this appeal was prosecuted.

The only question presented for our consideration is that of the negotiability or nonnegotiability of the note. The first section of the negotiable instruments act (Laws 1899, [66 Wash. 378] p. 340, § 1; 2 Rem. & Bal. Code, § 3392), definding such instruments, contains the following: 'An instrument to be negotiable must conform to the following requirements: (1) It must be in writing and signed by the maker or drawer; (2) must contain an unconditional promise or order to pay a sum certain in money; (3) must be payable on demand, or at a fixed or determinable future time; (4) must be payable to order or to bearer. * * *' The note here in question obviously conforms to this definition, unless it is made conditional as to amount or uncertain as to time by the following sentence: 'This note is given to take up the freight and rehandling of N. P. car 43607 and proceeds from resale of said car shall apply on this note.' It is clear that the note, exclusive of this sentence, is not obnoxious to the definition in either of these particulars. It was payable on demand, thus falling within the very terms of the statutory definition as to time of payment. Giving to the words of the above quoted sentence their natural and ordinary significance, it cannot be held to make the note payable otherwise than on demand. They do not stipulate either expressly or by any implication, necessary or otherwise, that the note shall be payable only out of the proceeds of the resale of the car of shingles. Nor do they make the payment contingent upon or subject to a resale. There is no provision that demand shall be postponed to a resale. This note like every other written instrument must be construed as a whole so as to give effect to every part of it if possible. This can only be done by holding the whole amount due and payable on demand, and that the proceeds of the sale of the shingles in case of a resale before demand shall be applied on the amount, but, in case of resale after demand, the proceeds shall go to reimburse pro tanto the makers of the note. This gives effect to every word in the note, and makes it an absolute promise to pay on demand with the designation of a fund to reimburse the maker for such payment. Any other construction would be to ignore the words 'on demand,' and arbitrarily substitute in the last sentence the words, 'payable only out of,' for the actual words, 'shall apply on.' These terms are by no means synonymous.

If, as seems inevitable, this note must be construed as payable on demand, it follows that there can be no uncertainty as to the amount. Payment is not made dependent upon the sufficiency of the...