Kennedy v. Broderick

• Decision Date: 15 June 1914
• Docket Number: 2090.
• Citation: 216 F. 137
• Parties: KENNEDY v. BRODERICK.
• Court: U.S. Court of Appeals — Seventh Circuit

216 F. 137

KENNEDY v. BRODERICK.

No. 2090.

United States Court of Appeals, Seventh Circuit.

June 15, 1914

Kennedy signed and delivered to Purse a written instrument, of which the following is a copy:

'Kansas City, Mo., June 5, 1911.

'$4,000.00 No. . . .

'Ninety days after date, for value received, I promise to pay to the order of W. D. Purse, four thousand and no/100 dollars at National Bank of Commerce, Kansas City, Mo., with interest from maturity until paid, payable annually at the rate of six per cent. per annum, and if not so paid, compounded. Demand, protest and notice of nonpayment of this note is waived by both makers and indorsers hereof. To secure the payment of this note, securities herewith delivered to the payee, are pledged as collateral security.

'W. B. Kennedy.

'The above collateral has a market value of $5500. If, in the judgment of the holder of this note, said collateral depreciates in value, the undersigned agrees to deliver when demanded additional security to the satisfaction of said holder; otherwise this note shall mature at once. Any assignment or transfer of this note, or other obligations herein provided for, shall carry with it the said collateral securities and all rights under this agreement. And we hereby authorize payee or his assigns or the legal holder hereof, on default of payment of this note or any part thereof, according to the terms thereof, to sell said collateral or any part thereof, at public or private sale and with or without notice and by such sale the pledgor's right of redemption shall be extinguished.'

In the original document the part shown in the copy above Kennedy's signature was printed in large type, and the part below the signature was printed in small type in the lower left corner of the paper, so that the signature in the lower right corner was below the large-type matter and opposite the small-type matter. Both parties of course agree that Kennedy intended to be bound by all the agreements and stipulations that appear upon the paper.

Broderick averred in his declaration that before the maturity of the instrument he purchased it in due course from Purse for full value, and that Purse duly indorsed and delivered it to him.

Kennedy admitted that this was so, but sought to avoid the effect thereof by pleading that he signed and delivered the instrument to Purse as surety for Joyce on Purse's promise to obtain Joyce's signature and thereupon to advance the money to Joyce, that Purse failed to make the loan, failed to obtain Joyce's signature, and wrongfully sold the instrument to Broderick, and that this was done without his knowledge or consent.

On the court's sustaining a demurrer to this plea, Kennedy declined to move further, and judgment followed.

Prior to 1911 Missouri had adopted the Uniform Negotiable Instruments Act. R.S. mo. 1909, Sec. 9972 et seq.

James M. Rader, of Kansas City, Mo., for plaintiff in error.

Edmund W. Burke, of Chicago, Ill., for defendant in error.

Before BAKER, SEAMAN, and MACK, Circuit Judges.

BAKER Circuit Judge (after stating the facts as above).

Under the general law, as well as under the Negotiable Instruments Act, the writing in question, if the small-type matter in the lower left corner be disregarded, constitutes a perfect negotiable promissory note.

Does the inclusion within the same document of an agreement respecting a pledge of collateral securities, by the terms of which the pledgee may anticipate maturity, sell collaterals, and leave an uncertain amount unpaid, render the instrument nonnegotiable?

No, if this is a question of Missouri law. For her courts have clearly and unmistakably arrived at the following position If two instruments are executed at the same time, in the course of the same transaction, and...