Gazlay v. Riegel

• Decision Date: 19 March 1901
• Docket Number: 54-1900
• Citation: 16 Pa.Super. 501
• Parties: Gazlay v. Riegel
• Court: Pennsylvania Superior Court

16 Pa.Super. 501

Gazlay v. Riegel

No. 54-1900

Superior Court of Pennsylvania

March 19, 1901

Argued November 20, 1900

Appeal by defendant, from order of C.P. Bucks Co.-1898, No. 18 making absolute a rule for judgment for want of a sufficient affidavit of defense, in case of John C. Gazlay and George E Gazlay, trading as Gazlay Brothers v. George A. Riegel.

Assumpsit on a promissory note. Before Yerkes, P. J.

The note in suit was as follows:

" $ 375. Durham, Pa. February 18, 1897.

" On the 25th day of December, 1897, for value received, I promise to pay to the order of the De Laval Separator Company, three hundred and seventy-five Dollars, at the (bank) Northampton County National Bank. This note is given for an Acme Turbine Separator, No. 34,487. The express condition of the sale and purchase of said chattels and the giving of this note, is that the title, ownership, or possession does not pass from the De Laval Separator Company 74 Cortland Street, New York, or the indorser, to the maker of this note or any other person until this note is fully paid and satisfied; and the drawers and indorsers severally waive presentment, protest and notice of protest and nonpayment of this note.

[Signed] " George H. Riegel.

" P. O. Address, Durham, Pa."

In the statement of the case, it was stated that Riegel, on February 18, 1897, made his promissory note in the words above given. It was further stated as follows:

" Indorsements on said note.

" For value received, we, the indorsers, hereby guarantee the payment of the within note.

" H.W. Gross.

" Pay to the order of Gazlay Brothers"

" The De Laval Separator Company.

" F. Porie, Cashier.

" Gazlay Bros."

And across the face of the said promissory note is written the words, " payment stopped."

In the statement it was further averred that said promissory note, having thus been made, had been delivered to the Separator Company, and had passed, by subsequent indorsements, to Gazlay Brothers.

The affidavit of defense averred that the note was not negotiable; that it had been given for an Acme Turbine Separator, under certain representations as to the character of said separator, of a character most material; that these representations were false; that the separator was unfit for use; that the De Laval Separator Company had promised to adjust the same and to put it in proper condition to do the work it had been agreed it should do; that the company had failed to keep this promise; that the machine was worthless; and that " finally and before the maturity of the note in suit the defendant removed the said separator from his creamery and returned it to the said company."

The court made absolute a rule for judgment for want of a sufficient affidavit of defense.

Error assigned was the order of the court.

John G. Johnson, with him Warren S. Long and Robert M. Yardley, for appellant. -- The note was not negotiable: Chicago Ry. Equipment Co. v. Merchants' Bank, 136 U.S. 268; Heryford v. Davis, 102 U.S. 235; Harkness v. Russell, 118 U.S. 663; Sloan v. McCarty, 134 Mass. 245; Brown Bros. & Co. v. Billington, 163 Pa. 76; Ernst v. Steckman, 74 Pa. 13; Overton v. Tyler, 3 Pa. 347; Zimmerman v. Anderson, 67 Pa. 421; Woods v. North, 84 Pa. 407; Iron City Nat. Bank v. McCord, 139 Pa. 59; Post v. Kinzua Hemlock Ry. Co., 171 Pa. 616; Costelo v. Crowell, 127 Mass. 293.

Henry Lear, with him E. Wesley Keeler, for appellees. -- The question as to the negotiability of the note sued upon in this case has been settled by decisions of the courts of other states. The instruments upon which suit was brought in the cases referred to contained clauses precisely similar to that in the case under consideration. It is submitted that they present controlling arguments for a like conclusion by this court when the same question is presented for decision for the first time, as it now is: Heard v. Dubuque County Bank, 8 Neb. 10; Choate v. Stevens, 43 L. R. A. (Mich.) 277; Wright v. Traver, 73 Mich. 493; 3 L. R. A. 50; Collins v. Bradbury, 64 Me. 37; Mott v. Havana Nat. Bank, 22 Hun, 354; Chicago Ry. Equipment Co. v. Merchants' Bank, 136 U.S. 268; Heryford v. Davis, 102 U.S. 235; Woods v. North, 84 Pa. 407; Smith v. Shippey, 182 Pa. 24; Nat. Bank of Royersford v. Davis, 6 Montg. 99.

Before Rice, P. J., Beaver, Orlady, W. W. Porter and W. D. Porter, JJ.

OPINION

RICE, J.

This action of assumpsit was brought by the indorsee against the maker of a promissory note drawn in the usual form and payable at a future date, but containing the following added clauses: " This note is given for an Acme Turbine Separator, No. 34487. The express condition of the sale and purchase of said chattels and the giving of this note, is that the title, ownership or possession does not pass from the De Laval Separator Company, 74 Cortland street, New York, or the indorser to the maker of this note or any other person until this note is fully paid and satisfied."

The affidavit of defense averred that the note was not negotiable; that it had been given for a separator, under certain material representations as to the character of the same; that these representations were false; that the separator was unfit for use; that the De Laval Separator Company had promised to adjust the same and to put it in proper condition to do the work it had been agreed it should do; that the company had failed to keep this promise; that the machine was worthless; and that " finally and before the maturity of the note in suit the defendant removed the said separator from his creamery, and returned it to the said company."

That this would be a valid defense if the action had been brought by the payee in the note is undisputed. The question is whether the added words above quoted destroyed the negotiability of the note, so that the same defense is available in an action brought by one to whom the note was transferred by indorsement before maturity. The proper determination of this question depends upon the determination of the real nature of the transaction as disclosed in the paper itself. The name which parties to a written contract give to the transaction is not conclusive as to its character. If upon a construction of the instrument as a whole, it appears that the transaction was not what they denominated it, this construction must prevail. " It is quite unmeaning for parties to a contract to say that it shall not amount to a sale, when it contains every element of a sale and transmission of ownership:" Heryford v. Davis, 102 U.S. 235, 26 L.Ed. 160. It is equally unmeaning for them to say that it is a sale, when every element of a sale is lacking. In the contract under consideration the transaction is spoken of as the " sale and purchase" of a chattel. But it is by no means clear that a present sale was meant; for in the immediate context it appears that neither the " title," the " ownership" nor the " possession" of the chattel was to pass from the payee until the stipulated price was paid. To call this a sale was a misnomer. So far as we can judge from what appears in the instrument, it was not, in its essence, an executed contract of sale, an absolute sale, to constitute which the general property in the chattel must pass, but a contract to sell, which contemplated the transfer of the title, ownership and possession in the future, or at the very best, a conditional sale. Presumably such transfer and payment of the stipulated price were to be contemporaneous; and the principle established by the modern decisions, that, in the absence of clear indications to the contrary, promises, each of which formed the whole consideration for the other, will be held to be concurrent conditions, would seem to apply. So that, if the De Laval Separator Company was unable or refused to perform its implied obligation to transfer the title, ownership and possession, the other party to the contract would be released from his promise to pay. If we are correct in this interpretation of the contract and in this conclusion as to the nature of the defendant's obligation under it, the further conclusion would seem...