John B. N. Stults v. Manuel Silva &Amp; Another

• Decision Date: 12 November 1875
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: John B. N. Stults v. Manuel Silva & another

119 Mass. 137

John B. N. Stults v. Manuel Silva & another

Supreme Court of Massachusetts

November 12, 1875

Suffolk. Contract against Manuel Silva and Benjamin B Newhall. The first count alleged that Silva made a promissory note, a copy of which was annexed, payable to Newhall or order, and that Newhall, "waiving demand and notice indorsed the same to the plaintiff," and that Newhall owed the plaintiff the amount of the note and interest thereon. The copy of the note was as follows:

"$ 2268.00. Boston, February 1st, 1872. For value received, I promise to pay to Benjamin B. Newhall, or order, $ 2268.00 in one and a half years, or sooner at the option of the mortgagor, from this date, with interest to be paid semi-annually at the rate of seven per cent. per annum during said term, and for such further time as said principal sum or any part thereof shall remain unpaid. Manuel Silva.

"Secured by mortgage of real estate in Boston, Mass., stamped as required by U.S. Internal Revenue Laws, to be recorded in Suffolk Registry of Deeds."

[Indorsed.] "Waiving demand and notice. Benjamin B. Newhall."

The second count was upon another note differing only in amount from the preceding, and with a similar indorsement. Answer, a general denial. The plaintiff discontinued as to Silva, on the ground of his discharge in bankruptcy; and a trial was had against Newhall in the Superior Court, before Putnam, J who allowed a bill of exceptions in substance as follows:

The plaintiff proved the signatures of Silva as maker, and Newhall as indorser, as alleged; that the notes had not been paid; that he was the holder of the notes, and paid cash for them, and called upon Newhall, when they matured, to pay them, and he did pay the interest to August, 1873; and rested the case. The defendant contended and asked the judge to rule that the notes were not negotiable, and that this action could not be maintained against him as indorser; but the judge ruled otherwise. The jury returned a verdict for the plaintiff; and the defendant alleged exceptions.

Exceptions sustained.

L. W. Howes, for the defendant.

C. S Lincoln, for the plaintiff. 1. The notes are negotiable. Even if it is assumed that the maker is the mortgagor, which is not a fact apparent on the face of the notes, the maker promises to pay in a time certain, or sooner, at the option of the mortgagor, that is, if he pleases. The promise to pay sooner if the maker pleases, is no promise, and is absurd and meaningless. No right is reserved thereby to pay before maturity. Being meaningless, the words should be entirely disregarded.

In Way v. Smith, 111 Mass. 523, there was a distinct agreement that the maker should have the right to pay the note before maturity, and that a lower rate of interest should be paid.

In Hubbard v. Mosely, 11 Gray 170, it was distinctly agreed that on the payment to the original payee, the note should be given up to the maker. In the present case, the payment could be made only to the actual holder.

The phrase, "or sooner at the option of the mortgagor," is rendered still more absurd and ambiguous, by the word "mortgagor." There is nothing on the notes to show who the mortgagor is. Cota v. Buck, 7 Met. 588. Stevens v. Blunt, 7 Mass. 240. Baxter v. Stewart, 4 Sneed, (Tenn.) 213. Washington County Ins. Co. v. Miller, 26 Vt. 77.

2. The defence that the notes were not negotiable, was not open to the defendant on his answer. The answer is a general denial. There is no denial of liability on the allegations of the plaintiff. The allegations of the plaintiff were all proved, and no question of law was raised by the defendant, either in his answer, or on demurrer.

3. The defendant Newhall is estopped to deny the negotiability of the notes. He indorsed them, waiving demand and notice. His intent to hold himself liable as indorser is plainly to be inferred from these words, or they mean nothing. There was an implied promise by Newhall to pay the notes at maturity if the maker did not. The payment of the interest by Newhall supports the inference of a promise. If there were no such intent, Newhall would have indorsed the note "without recourse." Leidy v. Tammany, 9 Watts 353...