Fleming v. Sherwood
| Decision Date | 11 December 1912 |
| Parties | FLEMING v. SHERWOOD |
| Court | North Dakota Supreme Court |
Appeal by plaintiff from a judgment of the District Court for Cass County, Pollock, J., in defendant's favor in an action on a promissory note.
Affirmed.
A. C Lacy, for appellant.
A clause retaining title in the vendor does not destroy negotiability, First Nat. Bank v. Slaughter, 98 Ala 602, 39 Am. St. Rep. 88, 14 So. 545; Heard v. Dubuque County Bank, 8 Neb. 10, 30 Am. Rep. 811; W. W Kimball v. Mellon, 80 Wis. 133, 48 N.W. 1100; Chicago R. Equipment Co. v. Merchant's Nat Bank, 25 F. 809; Burnley v. Tufts, 66 Miss. 48, 14 Am. St. Rep. 540, 5 So. 627; Bank of Carroll v. Taylor, 67 Iowa 572, 25 N.W. 810; Chicago R. Equipment Co. v. Merchants' Nat. Bank, 136 U.S. 268, 34 L.Ed. 349, 10 S.Ct. 999; Mott v. Havana Nat. Bank, 22 Hun, 354; Third Nat. Bank v. Bowman-Spring, 50 A.D. 66, 63 N.Y.S. 410; Arnold v. Rock River Valley Union R. Co. 5 Duer, 207; Hodges v. Schuler, 22 N.Y. 114; Frank v. Wessels, 64 N.Y. 155.
Turner & Murphy, for respondent.
A contract for the payment of a sum certain on a day certain, which has coupled with such promise a stipulation reserving the title of property in the payee, not a contract which can become a negotiable instrument. Poirier Mfg. Co. v. Kitts, 18 N.D. 556, 120 N.W. 558; Pfeiffer v. Norman, 22 N.D. 168, 38 L.R.A.(N.S.) 891, 133 N.W. 99; Sloan v. McCarty, 134 Mass. 245; Killam v. Schoeps, 26 Kan. 310, 40 Am. Rep. 313; Wright v. Traver, 73 Mich. 493, 3 L.R.A. 50, 41 N.W. 517; First Nat. Bank v. Alton, 60 Conn. 402, 22 A. 1010; South Bend Iron Works v. Paddock, 37 Kan. 510, 15 P. 574; Deering v. Thom, 29 Minn. 120, 12 N.W. 350; Post v. Kinzua Hemlock R. Co. 171 Pa. 615, 33 A. 362; Third Nat. Bank v. Armstrong, 25 Minn. 530; 7 Cyc. 581.
Statement
Early in May, 1908, one H. Q. Turner, a collecting agent for Fetzer & Company, telephoned from Fargo to defendant, a farmer at Verona, that in settling up the Fetzer & Company business in North Dakota he had two drills which he proposed to sell the defendant for $ 50. It was agreed that the drills should be delivered to the defendant at Verona, North Dakota, in the June, following. A note dated May 12, 1908, was sent by Turner to the defendant, and was signed by the defendant and returned by mail. The note was as follows: This note was on June 9th, 1908, sold to the plaintiff, who testifies that at such time he had no knowledge of any defenses thereto, and this fact is not disputed, although there is some somewhat inconclusive evidence which might tend to show that at the maturity of the note Fetzer & Company made a demand for its payment. The evidence showed that Fetzer & Company did not ship the drills to defendant at any time, nor did the defendant ever receive such property. It does not show, however, that he ever made any demand for such drills until asked to pay the note. At the close of the evidence the plaintiff moved for a directed verdict, which motion was denied. The jury thereupon rendered a verdict in favor of the defendant, and plaintiff moved for judgment notwithstanding the verdict, and in the alternative for a new trial. This motion was also denied, and on the 14th day of June, 1911, judgment was rendered in favor of the defendant, and against the plaintiff. Plaintiff appeals from the order denying his motion and from the judgment.
BRUCE, J. (after stating the facts as above). Many errors are assigned by the plaintiff and appellant. The principal error, however, is that alleged to have been committed by the trial court in holding that the note in controversy was not negotiable. If this question is determined adversely to the plaintiff and appellant, it practically disposes of the remainder of the assignments, and the judgment of the lower court should be sustained.
We are of the opinion that the note was not negotiable. The question before us is an exceedingly difficult one to determine, as are usually all questions which involve a construction of the statutes. In considering the same we must bear in mind that we are construing the provisions of the so-called uniform negotiable instruments act, and not of the former statutes of this state, nor of the law merchant. We must, however, consider, to a greater or less degree, these former statutes and the law merchant, as their provisions and interpretation are all that we have to go by in construing many of the doubtful provisions of the codified, uniform law. We, in fact, have been able to find no cases since the adoption of the uniform act in this state which have directly passed upon the question before us. Counsel for the respondent, it is true, cites the case of Gazlay v. Riegel, 16 Pa.Super. 501, but that case, though handed down after the adoption of the uniform act in Pennsylvania, considered and construed a note which was executed prior to the passage of the statute.
The specific question which we are called upon to decide is whether the special clause in the instrument before us, to the effect that "payee's ownership of goods account of which this note is given, the account thereof, and contract condition of original sale, are not affected by accepting this note until the receipt of the full amount due thereon," has the effect of neutralizing the otherwise positive agreement to pay, and of destroying the negotiability of the instrument. The uniform negotiable instruments act (Rev. Codes 1905, §§ 6303 et seq.) provides, among other things, that "an instrument, to be negotiable, . . . (2) must contain an unconditional promise or order to pay a certain sum in money;" and "(3) must be payable on demand or at a fixed or determinable future time." This former provision, however, is qualified by § 6305, which provides, among other things, that "an unqualified order or promise to pay is unconditional within the meaning of this chapter, though coupled with . . . a statement of the transaction which gives rise to the instrument." The question, then, before us, resolves itself into the question whether the promise to pay is unconditional.
There is a conflict in the authorities under the law merchant and under the statutes which were based upon it, as to the effect of a reservation of title in the vendor of goods which is noted on the face of the instrument. Some of the cases make the distinction turn upon the fact of possession. Some hold that where the right of possession is in the vendee, and the seller has merely a naked title subject to the interest of the buyer, while the buyer has the right of possession and the contingent right to a title which would vest absolutely on the payment of the agreed price without further act on the part of the seller, the transaction is a security transaction, and not a conditional sale, and that the note is none the less negotiable. They hold, however, that where the possession is retained by the seller until the full payment of the purchase price, as well as the title, the note is not negotiable, since the agreement to pay is conditioned upon the fact of delivery, which is within the control of the vendor, and who, on the failure to pay at maturity, might cancel the agreement and retain the property. They in short hold that in such cases there is no positive agreement to pay, but rather that the transfer of title and possession and payment shall be simultaneous acts. Some reach this conclusion even where the possession is in the vendee holding that the transfer of title is contingent upon the payment, and the promise to pay is therefore conditional. Others hold that the reservation of title in an instrument incorporates into the same a dual contract, and for this reason renders it non-negotiable. Others still hold that the reservation of title, even though coupled with possession, or the right to retake possession even after delivery if the vendor feels himself insecure, and this whether before or after the time when the payment has become due, does not have the effect of rendering the instrument non-negotiable, provided that the promise to pay is in itself unconditional. There can be no doubt, however, that the weight of authority under the law merchant and the former statutes is against the negotiability of a note which upon its face retains title in the vendor, and this whether the possession is retained by the vendor or not. 7 Cyc. 581; Sloan v. McCarty, 134 Mass. 245; First Nat. Bank v. Alton, 60 Conn. 402, 1010, 22 A. 1010; South Bend Iron Works v. Paddock, 37 Kan. 510, 15 P. 574; Killam v. Schoeps, 26 Kan. 310, 40 Am. Rep. 313; Wright v. Traver, 73 Mich. 493, 3 L.R.A. 50, 41 N.W. 517; Bannister v. Rouse, 44 Mich. 428, 6 N.W. 870; Edwards v. Ramsey, 30 Minn. 91, 14 N.W. 272; Deering v. Thom, 29 Minn. 120, 12 N.W. 350; Stevens v. Johnson, 28 Minn. 172, 9 N.W. 677; Third Nat. Bank v. Spring, 28 Misc. 9, 59 N.Y.S. 794; W. W. Kimball & Co. v. Mellon, 80 Wis. 133, 48 N.W. 1100; Post v. Kinzua Hemlock R. Co., 171 Pa. 615, 33 A. 362. And in our research we have only been able to find one case, that of Siegel, C. & Co. v. Chicago Trust & Sav. Bank, 131 Ill. 569, 7 L.R.A. 537, 19 Am. St. Rep. 51, 23 N.E. 417, in which a note was held negotiable where the temporary possession, at...
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