Sykes v. The Citizens' National Bank of Des Moines

• Citation: 78 Kan. 688,98 P. 206
• Decision Date: 07 November 1908
• Docket Number: 15,261
• Parties: R. A. SYKES et al., as Partners, etc., et al., v. THE CITIZENS' NATIONAL BANK OF DES MOINES, IOWA
• Court: Kansas Supreme Court

98 P. 206

78 Kan. 688

R. A. SYKES et al., as Partners, etc., et al., v. THE CITIZENS' NATIONAL BANK OF DES MOINES, IOWA

No. 15,261

Supreme Court of Kansas

November 7, 1908

Decided July, 1908.

Error from Wyandotte district court; J. MCCABE MOORE, judge.

Judgment reversed and cause remanded.

S. S Ashbaugh, and A. E. Helm, for plaintiffs in error.

Stewart Taylor, and J. D. McCue, for defendant in error.

OPINION

BENSON, J.:

A judgment for the bank in this action was reversed on a former hearing in this court, (Sykes v. Bank, 69 Kan. 134 76 P. 393.) On the second trial, in addition to the facts stated in the former opinion, the court found that the office of the payees, where the note was made payable, was in Missouri, and that by the law of that state the note is, and was, negotiable. By reason of the recitals in the note making the time of payment uncertain it was held to be non-negotiable by this court. The trial court, after an amendment of the petition, having found the additional facts above stated, again rendered judgment for the plaintiff. The defendants now ask for a reversal upon the grounds, first, that the former decision of this court that the note is non-negotiable is a final adjudication of that matter, and, second, that the finding of the district court relative to the law of Missouri is not sustained by the evidence.

This note was made in Kansas by residents of this state, and was payable, as the evidence now shows, in Missouri. It was indorsed by the payees, before maturity, to the Union Brokerage Company of Kansas, and was indorsed by that company, in Kansas, to the plaintiff, a national bank of Iowa. The makers had no knowledge or notice of these transfers, and paid the note before maturity to the payees, who had no authority from the holder to receive such payment. Upon these facts alone the judgment should be for the defendants, if we follow the former decision that the note was non-negotiable. It is claimed by the plaintiff, however, that the additional findings that the note was payable in Missouri and that it is a negotiable instrument warrant the judgment for the plaintiff.

The new issue presented upon an amendment allowed by the district court in its discretion had not before been adjudicated, and was properly tried. Therefore the first ground urged for reversal can not be sustained.

Subject to qualifications not necessary now to consider, the law of the place of performance of contracts governs in determining the liability of the contracting parties, and this principle applies to promissory notes. (1 Randolph, Com. Paper, 2d ed., § 31; 2 Parsons, Notes & Bills 324; 1 Dan. Neg. Inst., 4th ed., § 879.)

"Matters bearing upon the execution, the interpretation and the validity of a contract are determined by the law of the place where the contract is made. Matters connected with its performance are regulated by the law prevailing at the place of performance. Matters respecting the remedy, such as the bringing of suits, admissibility of evidence, statutes of limitation, depend upon the law of the place where the suit is brought." (Scudder v. Union National Bank, 91 U.S. 406, 412, 23 L.Ed. 245.)

We conclude that the negotiable character of this note must be determined by the laws of Missouri, where it was made payable. The question as to how this law is to be determined has been elaborately argued. Two views have been taken, both well supported by precedents. The federal court and the courts of New York, Iowa, Maine and Georgia have held that, as the law to be applied is the general commercial law, or law merchant, it must be sought for, not in the decisions of local tribunals, but in the general doctrines of commercial jurisprudence; that, while following the decisions of the courts of final resort of the state where the note is payable in the construction of its statutes, the courts of the state where the case is tried will be governed by their own precedents in expounding the general common law applicable to commercial transactions. (Oates v. National Bank, 100 U.S. 239, 25 L.Ed. 580; St. N. Bank v. S. N. Bank, 128 N.Y. 26, 27 N.E. 849, 13 L. R. A. 241; Roads v. Webb, 91 Me. 406, 40 A. 128, 64 Am. St. Rep. 246; Franklin v. Twogood, 25 Iowa 520, 96 Am. Dec. 73; The National Bank of Michigan v. Green, 33 Iowa 140; Patillo v. Alexander, 105 Ga. 482, 30 S.E. 644.)

Notwithstanding the weight of the foregoing decisions, and the strength of the argument in their support, the rule adopted in a large majority of the state courts and announced by text-writers is that, when it becomes necessary to determine the common law of another state, the decisions of the courts of final resort of that state will be followed, regardless of precedents to the contrary in the state where the trial is held, and that this rule applies to the law merchant as well as to other branches of the common law. This rule is based upon the presumption that the parties have contracted with reference to the law of the place of payment, and that law is applied in accordance with the doctrine of comity. This rule has been approved in this court in its application to other subjects, but it does not appear to have been directly invoked with respect to commercial paper. (St. L. & S. F. Rly. Co. v. Weaver, 35 Kan. 412, 11 P. 408, 57 Am. Rep. 176; Alexander v. Barker, 64 Kan. 396, 67 P. 829; Railroad Co. v. Johnson, 74 Kan. 83, 86 P. 156.) The opinion in Loan Co. v. Solomon, 71 Kan. 185, 79 P. 1077, clearly stated the principle upon which contracts solvable by the laws of another state are enforced here.

Following the rule generally prevailing, we should now hold the note in question to be a negotiable instrument if the law of Missouri is as the district court found it to be. That finding, however, is challenged upon the ground that it is not supported by the evidence, and as the evidence consists of the statutes of Missouri and decisions of courts of that state, pleaded as facts, the sufficiency of the proof to sustain the finding is fairly presented for review here. ( Belknap v. Sleeth, 77 Kan. 164, 93 P. 580.) The statute pleaded and read in evidence is as follows:

"Every promissory note for the payment of money to the payee therein named, or order or bearer, and expressed to be for value received, shall be due and payable as therein expressed, and shall have the effect and be negotiable in like manner as inland bills of exchange." (Rev. Stat. of Mo. 1899, § 457.)

The decision of the supreme court of Missouri, a part of which was set out in the petition and all of which was read in evidence, is the opinion in Stillwell v. Craig et al., 58 Mo. 24. The action was upon a promissory note payable "in instalments not to exceed ten per cent. on each share [of the stock for which it was given], at thirty days notice of call from the board of directors." (Page 28.) The opinion said:

"Our statutory requisites for negotiable paper are fully met in this instrument. . . . But the defendants insist that it lacks in two particulars, the certainty essential to make it a promissory note, viz.: As to amount, and as to time of payment. . . . As to time of payment, the law is less exacting. . . . Contingencies in this particular must be exceedingly remote, in order to vitiate the paper for negotiable capacity. In Washington County Mut. Ins. Co. v. Miller, 26 Vt. 77, a note for twenty-one dollars, payable 'in such portions and at such time or times as the said company may, agreeably to their act of incorporation, require,' was held to be a promissory note for the sum specified, so as to determine a question of jurisdiction; but a doubt was expressed whether it would be such in a commercial sense. The doubt, however, as it seems to me, is not justified by the reasoning of the opinion, or by the authorities which it cites.

"In President, Directors, &c. v. Hurtin, 9 Johns. 217, 6 Am. Dec. 273, a similar instrument was held to be a good...