Slaughter v. Bank of Bisbee

• Decision Date: 10 February 1916
• Docket Number: Civil 1476
• Citation: 17 Ariz. 484,154 P. 1040
• Parties: R. L. SLAUGHTER, Appellant, v. THE BANK OF BISBEE, a Corporation, Appellee
• Court: Arizona Supreme Court

154 P. 1040

17 Ariz. 484

R. L. SLAUGHTER, Appellant, v. THE BANK OF BISBEE, a Corporation, Appellee

Civil No. 1476

Supreme Court of Arizona

February 10, 1916

APPEAL from a judgment of the Superior Court of the County of Cochise. A. C. Lockwood, Judge. Affirmed.

Messrs Richardson & White, for Appellant.

Messrs Ellinwood & Ross and Mr. S. H. Morris, for Appellee.

OPINION

ROSS, C. J.

The questions presented to this court for solution are involved in the following note:

"Douglas Arizona, April 9, 1913.

"Six months after date, for value received, we promise to pay to the order of Geo. F. Woodward, twenty-seven thousand one hundred and eighty-seven 50/100 dollars, at the Bank of Douglas, Douglas, Arizona, with interest thereon from date until paid, at the rate of six per cent. per annum; the said interest, if not so paid, to be added to and become a part of the principal, and bear the same rate of interest. And in case suit or action is instituted to collect this note or any portion thereof, we promise to pay, besides the costs and disbursements allowed by law, such additional sum as the court may adjudge reasonable as attorney's fees in such suit or action.

"W B. SLAUGHTER.

"GEO. N. SLAUGHTER.

"R. L. SLAUGHTER.

"For payment under contract of even date."

The appellee, claiming said instrument to be a negotiable note and claiming to be the owner and holder thereof in due course, instituted this proceeding against the makers and the payee and indorser, Geo. F. Woodward, to collect the principal amount and interest due thereon.

The only one of the defendants that appeared and filed an answer was R. L. Slaughter, one of the makers of the note. He defended the action on the ground that the note was given in consideration of the performance of a certain executory contract entered into between the makers and the payee, Woodward. It is alleged that the contract was not performed by the payee, and hence a failure of consideration for the note. The theory of the defense being that the note was a non-negotiable instrument and therefore subject to that defense, for the reason that there appears on the face of the note words that conditioned its payment, the words being: "For payment under contract of even date." The plea of failure of consideration was stricken upon the motion of appellee, the trial court holding that the note was negotiable.

It was also alleged in the answer that the appellee took the note with full notice and knowledge of the purpose for which the same was given and the consideration thereof, and of all the circumstances under which said note was made. Evidence, upon this issue made by the answer, was introduced at the trial, the appellant on his part offering, among other evidence, the contract pleaded in his answer and out of which transaction the note sued upon originated. The contract involved the purchase from Woodward by appellant and his co-makers of a ranch and cattle situated in Mexico for a consideration of $108,750, to be paid as follows, to wit:

"The sum of $27,187.50 cash, in hand paid, the receipt whereof is hereby acknowledged by the party of the first part and the further sum of $27,187.50 three months from date hereof. And the further sum of $27,187.50 six months from the date hereof, and the further sum of $27,187.50 nine months from date hereof. Each of the deferred payments being evidenced by a promissory note of even date herewith, due three months, six months and nine months from the date hereof, bearing interest at the rate of 6 per cent. per annum from date until paid. Said notes to be payable at the Bank of Douglas, in the city of Douglas, county of Cochise, state of Arizona."

The judgment being in favor of the appellee, the appellant, R. L. Slaughter, prosecutes his appeal therefrom and assigns ten specifications of error. We think, however, that there is but one question involved -- that is, the negotiability or non-negotiability of the instrument sued upon. If it is a commercial paper under the law-merchant or under the negotiable instrument law of this state, the judgment of the lower court must be upheld.

One of the requisites to a negotiable instrument is that "it must contain an unconditional promise or order to pay a sum certain in money." Civil Code 1913, par. 4146. The appellant earnestly contends that the words, "for payment under contract of even date" indorsed upon the note qualifies and conditions the promise to pay and makes the obligation to pay contingent upon the terms of the contract therein referred to. No case has been cited by counsel, nor have we been able to discover any, after a very thorough search, in which language such as is here involved was passed upon or discussed, although the books are full of cases based upon "conditional paper, distinctly conditional in form." Many of such cases are cited in 7 Cyc. 575, note 82. Also note to Klots Throwing Co. v. Manufacturers' Commercial Co., 179 F. 813, 30 L.R.A. (N.S.) 40, 103 C.C.A. 305.

It seems to us that the expression "for payment under contract of even date" is far from being "distinctly conditional." Giving it the implication of a condition, it is at best conjectural and misty. The instrument is signed by the maker, in which he promises to pay a sum certain in money at a fixed time and payable to the order of a...