De Hass v. Roberts

• Decision Date: 30 January 1894
• Citation: 59 F. 853
• Parties: DE HASS v. ROBERTS et al.
• Court: U.S. District Court — Western District of Pennsylvania

59 F. 853

DE HASS v. ROBERTS et al.

United States Circuit Court, W.D. Pennsylvania.

January 30, 1894

Shiras & Dickey, for plaintiff.

Robert S. Frazer, for defendants.

ACHESON Circuit Judge.

1. The first reserved question of law is 'whether, under the evidence, to wit, the writing sued on, the attached guaranty and the mortgage securing said obligation,--the writing sued on dated the 15th day of June, 1867, for $3,000, payable to the order of John D. Knox & Co.,--is a negotiable commercial instrument.' By this instrument, which was signed at Topeka, Kan., the makers, R. J. and Ida McFarland, promise to pay to John D. Knox & Co., or order, five years after date the sum of $3,000, with interest at the rate of 8 per cent per annum to be paid semiannually, as per annexed coupons the principal and interest being payable at the banking-house of the payees, in Topeka, Kan.; the writing declaring that 'this note' and the coupons 'are made and executed under, and are to be construed by, the laws of the state of Kansas, in every particular,' and are to draw 12 per cent. interest per annum after maturity, and that they are secured by a first mortgage on real estate, and providing that if any of the interest coupons shall not be paid at maturity the principal debt shall then become due, and the unpaid coupon first matured shall become a part of the principal, and the whole principal debt and first unpaid coupon shall bear interest at the rate of 12 per cent. per annum from the maturity of said coupon until paid. The 'attached guaranty' is no part of the instrument, but a stipulation of a later date given by a third person upon the transfer of the note. It therefore has no bearing upon this particular question. The recited mortgage was given by the makers of the note to the payees, and is conditioned for the payment by the mortgagors as well as of the note and interest as of all taxes and assessments to be levied upon the mortgaged premises, and that the mortgagors shall keep the buildings insured and in good repair, and refrain from cutting timber or committing other waste, with a provision that in case of default in the payment of any taxes or assessments, if the holder shall so elect, the note shall immediately become due. It is a collateral security,--a contract distinct from the note, and not contravening any of its terms. As it is the general rule that contracts are to be construed and governed by the law of the place where they are made and to be performed, the declaration contained in the paper in suit as to the controlling effect of the laws of Kansas in its construction only expresses what otherwise would have been implied. The precise question here raised was not involved in any of the decisions of the supreme court of Kansas brought to my attention. The instruments, which in Killam v. Schoeps, 26 Kan. 310, and Iron-Works v. Paddock, 37 Kan. 510, 15 P. 574, were held to be nonnegotiable, contained stipulations respecting the title and future disposition of the property which formed the consideration of the notes. They were not simply promises to pay money, but double contracts. We find, however, that it was decided in Seaton v. Scovill, 18 Kan. 433, that a stipulation to pay 'reasonable attorney's fees if suit be instituted' does not destroy the negotiability of a promissory note; and in Parker v. Plymell, 23 Kan. 402, that a note otherwise negotiable is not rendered nonnegotiable by reason of the provision, 'If this note is not paid at maturity, the same shall bear twelve per cent. interest from date.' In Chicago Ry. Equipment Co. v. Merchants' Bank, 136 U.S. 268, 10 S.Ct. 999, it was declared by the supreme court of the United States that under the general mercantile law the negotiability of a promissory note is not affected by the provisions therein that the title to the personal property for which it was given should remain, as security, in the vendor, the payee of the note, until all the notes of a series to which it belonged were paid, and that the note should become due and payable to the holder on the failure of the maker to pay the principal or interest of any of the notes of the series. It was likewise ruled in Ernst v. Steckman, 74 Pa. St. 13, that a promissory note is negotiable if payable certainly at a fixed time, although made subject to a contingency whereby it may become due sooner; and in Bank v. Crowell, 148 Pa. St. 284, 23 A. 1068, that the negotiability of a note is not destroyed by a clause therein stating that it was accompanied by a collateral security, and how the latter might be sold by the holder of the note if not paid at maturity. In the absence, then, of any decision by the courts of Kansas to the contrary, I feel justified in holding that the writing here in question is a negotiable commercial instrument.

2. The second reserved question is 'whether the indorsement of John Dibert & Co. after the assignment without recourse made by John D. Knox & Co., the payees, upon the writings sued on pro ut same in evidence, made the said John Dibert & Co. liable as indorsers of negotiable commercial paper; the transfer from John D. Knox & Co. to John Dibert & Co., and the transfer by John Dibert & Co. to F. S. De Hass, having been made in the state of Kansas.' The indorsed transfer by John D. Knox & Co. to John Dibert & Co., upon the note of June 15, 1887, for $3,000, is as follows: 'For value received, we hereby assign and transfer the within bond, together with all our interest in and rights under the...