Mercantile Protective Bureau v. Specht

• Decision Date: 05 June 1929
• Docket Number: No. 5611.,5611.
• Citation: 225 N.W. 794,58 N.D. 239
• Parties: MERCANTILE PROTECTIVE BUREAU v. SPECHT et al.
• Court: North Dakota Supreme Court

58 N.D. 239

225 N.W. 794

MERCANTILE PROTECTIVE BUREAU

v.SPECHT et al.

No. 5611.

Supreme Court of North Dakota.

June 5, 1929.

Syllabus by the Court.

The statement upon a trade acceptance “The obligation of the acceptor hereof arises out of the purchase of goods from the drawer” does not qualify the obligation of the acceptor to pay the instrument nor render it nonnegotiable. Section 3, Negotiable Instruments Law; section 6888, Compiled Laws of 1913.

When an instrument is introduced in evidence by one who purports to be the holder with all of the indorsements thereon, and no objection is made, the title of the holder is proved.

There being no conflict in the evidence introduced to prove that the plaintiff was a holder in due course, and no notice of any defense or proof of any circumstances sufficient to put the plaintiff on inquiry, and nothing to impugn its good faith, the trial court could properly grant the plaintiff's motion for judgment non obstante.

Appeal from District Court, Wells County; J. A. Coffey, Judge.

Action by the Mercantile Protective Bureau against Frank Specht and others, copartners. Verdict for defendants, and, from a judgment for plaintiff non obstante, defendants appeal. Affirmed.Joseph J. Habiger, of Harvey, for appellants.

Aloys Wartner, of Harvey, for respondent.

BIRDZELL, J.

This is an action brought by the plaintiff as holder of the following trade acceptance:

“Trade Acceptance

$285.00 April 27, 1927.

Sixty days after date pay to the order of Farmers' & Ranchers' Stock Salt Co., Inc. Omaha, Nebr. Two Hundred and Eighty-Five Dollars The obligation of the acceptor hereof arises out of the purchase of goods from the drawer.

To Wellsburg Supply Store, Wellsburg, No. Dak.

Farmers' & Ranchers' Stock Salt Co., Inc.

By E. M. Bechtelheimer Pres. & Treas.”

The above instrument bore upon its face an acceptance as follows:

“Accepted April 27, 1927. Bank Farmers' State Bank. Location of Wellsburg, N. D. Acceptor Wellsburg Supply Store, by Frank Specht.”

On the back was placed the blank indorsement of the payee.

At the trial it appeared that the defendant acceptor, soon after the acceptance of the instrument, canceled the order for the goods for which it had been issued. The court ruled that the instrument was nonnegotiable, and submitted the issues to the jury on this theory. A verdict was rendered for the defendant. Thereafter the plaintiff moved for judgment non obstante, which motion was granted. The defendant appeals from the judgment.

The appellant presents to this court three questions: (1) Is the instrument negotiable? (2) Did the plaintiff prove its title? (3) Does the evidence present a question of fact for the jury as to whether the plaintiff is a holder in due course? These questions will be considered in the order stated.

[1] 1. The contention that the instrument is nonnegotiable is founded upon the statement “The obligation of the acceptor hereof arises out of the purchase of goods from the drawer.” Section 3 of the Negotiable Instruments Act (section 6888, Compiled laws of 1913) reads: “An unqualified order or promise to pay is unconditional within the meaning of this chapter, though coupled with: * * * 2. A statement of the transaction which gives rise to the instrument. * * *” The appellant argues that the last-quoted portion of the trade acceptance in the instant case is more than a statement of the transaction which gives rise to the instrument within the above section, the contention being that it contains both a reference to the transaction and an additional expression showing an intention to qualify the obligation upon the instrument by the terms of the contract of purchase; so that there can be no greater obligation to pay the instrument than there might be to pay the purchase price. Comparison is invited with the case of Fleming v. Sherwood, 24 N. D. 144, 139 N. W. 101, 43 L. R. A. (N. S.) 945, in which it was held that a statement upon a note referring to the payee's ownership of goods on account of which the note was given and to the contract conditions of original sale, with a stipulation that they were not to be affected by the acceptance of the note until the receipt of the full amount, rendered the note nonnegotiable.

Referring to the statement in the note involved in the Fleming Case, the court said at page 150 of 24 N. D. (139 N. W. 103): “We have in this case, however, something more than the statement of the transaction. In fact there is no statement of the transaction at all. We have a reference to a transaction and to a contract which may be entirely inconsistent with an unconditional promise to pay, and an express agreement of reservation of ownership, which in itself makes the agreement to pay conditional. The contract disclosed is that of a conditional sale, and not of a security transaction.”

In the case at bar there is no stipulation in the bill of exchange with reference to its effect upon the rights of the parties under any other contract. No implication is fairly deducible from the language referring to the transaction that the obligation to pay is to be contingent upon the measure of performance of some other contract. The provisions of the Negotiable Instruments Law above referred to expressly say that an order to pay is unconditional, though coupled with a statement of the transaction which gives rise to the instrument, and, where such statement, fairly interpreted, does not in itself imply that the instrument is only to be paid upon the full performance of the contract referred to, a court is not at liberty to read such a condition into the instrument. Whenever a transaction that may be referred to in an instrument is executory, a situation might subsequently arise which would enable the maker or...