United Finance Co. v. Anderson
| Decision Date | 18 December 1957 |
| Citation | 212 Or. 443,319 P.2d 571 |
| Parties | UNITED FINANCE CO., an Oregon corporation, Respondent, v. William M. ANDERSON, Eva L. Anderson and William Morris Anderson, dba Anderson Willys Co., Appellants. |
| Court | Oregon Supreme Court |
Oglesby H. Young and Joseph Larkin, Portland, argued the cause for appellants. With them on the brief were Koerner, Young, McColloch & Dezendorf, and Frank H. Spears, Portland.
Denton G. Burdick, Jr., Portland, argued the cause for respondents. With him on the brief were Cake, Jaureguy & Hardy, and Jonathan U. Newman, Portland.
This is an action in conversion brought by United Finance Co., a corporation, as plaintiff, against a co-partnership known as Anderson Willys Co. to recover the proceeds of two checks drawn by plaintiff. The complaint alleges that defendants are engaged in the business of selling and distributing automobiles. When the transactions involved in this case occurred, the business was being conducted by a former partnership known as Cohen-Anderson Motor Co., of which firm defendants were partners. Since defendants have succeeded to the rights and liabilities of Cohen-Anderson Motor Co., we will for convenience refer to the defendants as Cohen-Anderson.
At the conclusion of plaintiff's case, the court denied the motion of defendant for a nonsuit. After both parties had rested the case was submitted to a jury which returned a verdict for defendants. Thereafter the court allowed plaintiff's motion for a judgment notwithstanding the verdict and entered judgment in favor of plaintiff for the full amount of said checks with interest and costs. From that judgment defendants have appealed, assigning as error the denial of their motion for a nonsuit and the granting of plaintiff's motion for a judgment notwithstanding the verdict.
Plaintiff's first cause of action is based on the following transaction. On November 7, 1949, Main Avenue Motors, Inc., the Willys dealer at Gresham, entered into a conditional sales contract by which it agreed to sell and one Leon L. Olmstead agreed to purchase a 1950 Willys station wagon, serial No. 108504. On the same day Main Avenue assigned said contract to United Finance with recourse. On November 8, 1949, United Finance in consideration for the assignment to it of said contract, drew and delivered to Main Avenue its check in the sum of $1,400. The check was drawn payable to the order of Main Avenue Motors, Inc. and Cohen-Anderson Motor Co. On November 9, 1949, Main Avenue endorsed said check and delivered it to Cohen-Anderson and on November 10, 1949, Cohen-Anderson endorsed and cashed said check.
The check bore on its face the following memorandum:
'This check is in full payment of items stated hereunder evidence of which consists of endorsement on back
1950 Willys Station Wagon
Model 4-63
This memorandum was printed except for the last four lines describing the vehicle which were typewritten.
Plaintiff's second cause of action is based on the following similar transaction. On November 9, 1949, Main Avenue entered into a conditional sales contract by which it agreed to sell and one A. W. Baker agreed to purchase a 1950 Willys pickup, serial No. 46587. On the same day Main Avenue assigned said contract to United Finance with recourse. On November 10, 1949, United Finance in consideration for the assignment to it of said contract, drew and delivered to Main Avenue its check in the sum of $1,470. This check was drawn payable to the order of Cohen-Anderson Motor Co. On November 13, 1949 Main Avenue delivered said check to Cohen-Anderson and on November 14, 1949, Cohen-Anderson endorsed and cashed said check.
The check bore on its face the following memorandum:
'This check is in full payment of items stated hereunder evidence of which consists of endorsement on back
1950 Willys Pickup
Main Avenue Mtrs.'
The last line of the memorandum on this check reading 'Main Avenue Mtrs.' had been written in ink.
It was stipulated by the parties that in return for said checks Cohen-Anderson delivered to Main Avenue two different motor vehicles than the motor vehicles described on the face of the checks.
Plaintiff bases its case on the following rule stated in Craven v. Wright, 114 Or. 692, 693, 236 P. 1043, 1044:
In arguing that the above rule is applicable, plaintiff relies entirely on the memorandum appearing on the face of the checks.
We believe the rule of the Craven case does not apply for two reasons. First, because the check was not given by plaintiff to Cohen-Anderson, and, secondly, because no instructions of any kind limiting the use of the check were given by plaintiff to Cohen-Anderson. Except for the checks themselves, there is no pleading or proof of any notice or other communication between Cohen-Anderson and plaintiff regarding these checks or regarding the transaction between plaintiff and Main Avenue. For the reasons hereinafter discussed, we think the memorandum appearing on the checks, by itself, did not restrict their use in the hands of a holder in due course. We think this case turns on whether the checks were negotiable and whether Cohen-Anderson was a holder in due course thereof.
We pause to point out that this case is distinguished by a remarkable lack of evidence concerning the transactions which resulted in this action. The plaintiff offered no evidence except that tending to prove the essential elements of a conversion based solely on its theory of the legal effect of the memorandum appearing on the checks. The result is a paucity of evidence which leaves unanswered some interesting questions of fact concerning these transactions.
Before directing our attention to the memorandum on the checks we will summarize the plaintiff's contentions as to the legal effect thereof. Plaintiff contends that, as a matter of law, the memorandum on the face of the checks (a) constituted a direction to Cohen-Anderson as to the application of the checks; (b) bound Cohen-Anderson to apply the checks as directed; (c) constituted notice to Cohen-Anderson that plaintiff delivered the checks to Main Avenue to be used only to pay for the motor vehicles described on the checks; (d) constituted notice to Cohen-Anderson that the title of Main Avenue to the checks was defective; and (e) made it impossible for Cohen-Anderson to become a holder in due course of the checks.
We next consider whether the memorandum appearing on the face of the checks rendered the checks non-negotiable. These checks were in the usual form and unless qualified by the memorandum, contained an unconditional order to pay a sum certain in money. ORS 71.003 1 provides that an unqualified order to pay is unconditional although coupled with 'a statement of the transaction which gives rise to the instrument.' The controlling question is whether the memorandum added a condition to the otherwise unconditional order to pay a sum certain in money and thus destroyed the negotiability of the checks.
In Page v. Ford, 65 Or. 450, 452, 131 P. 1013, 45 L.R.A.,N.S., 247, this court held a note negotiable which contained on the margin the following memorandum:
'This note is secured by mortgage of even date given to secure the balance of the purchase price of the property described in said mortgage.'
In Christian Community of Universal Brotherhood v. Graf, 137 Or. 638, 643, 1 P.2d 596, 599, this court also held a note negotiable which bore on the back thereof the following notation:
'This note is given to apply on the purchase price of land in township 18 * * * and more particularly described in mortgage made by the maker of this note dated January 19, 1924.'
In Voges Motor Co. v. Ward, 1929, 98 Fla. 304, 123 So. 785, 787, a promissory note in the usual form was held negotiable even though there appeared in the lower left hand corner a memorandum reading:
'This note is one of a series of 12 notes referred to in Conditional Sale Agreement, Chattel Mortgage, or Lease Agreement dated March 4, 1924, executed by the maker hereof covering BETHLEHEM Motor Vehicle No. G. N. 25097.'
The court said that this memorandum was only a statement of the transaction which gave rise to the instrument and did not in any way indicate that the note was conditioned or controlled or its negotiability impaired by the contract.
In Cotton v. John Deere Plow Co., 1944, 246 Ala. 36, 18 So.2d 727, 728, negotiability of two notes was not affected by a recital thereon that they were given 'for the purchase price or part of the purchase price of One Type W-Engine #1626 One 14 inch Hammer Mill,' the court holding that such recital was merely a 'statement of the transaction which gives rise to the instruments.'
In First Bank of Marianna v. Havanna Canning Co., 142 Fla. 544, 195 So. 188, 189, the court held that a notation on a check reading, 'For berries to be delvd us June 8th' did not impair the negotiability of the check. The court reviewed and cited numerous cases supporting its holdings and in conclusion said:
We quote from the opinion of the supreme court of Iowa in Rubio Sav. Bank of...
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