Woods v. North

• Decision Date: 11 June 1877
• Citation: 84 Pa. 407
• Parties: Woods v. North et al.
• Court: Pennsylvania Supreme Court

84 Pa. 407

Woods v. North et al.

Supreme Court of Pennsylvania.

June 11, 1877

May 29 1877

The insertion in a promissory note of the clause, " and five per cent. collection fee if not paid when due," renders the note uncertain, destroys its negotiability and relieves the endorser from liability thereon.

Before AGNEW, C. J., SHARSWOOD, MERCUR, GORDON, PAXSON, WOODWARD and STERRETT, JJ.

Error to the Court of Common Pleas of Huntingdon county Of May Term 1877, No. 99.

Debt by James North and others, trading as the Union Bank of Huntingdon against W. H. Woods, endorser of the following note:--

" $377. Huntingdon, Pa., May 5th 1875.

Sixty days after date I promise to pay to the order of W. H. Woods at the Union Bank of Huntingdon, three hundred and seventy-seven dollars and five per cent. collection fee if not paid when due, without defalcation, value received.

No. 14915. Due July 7th. SAMUEL STEFFEY."

Endorsement--" W. H. WOODS."

" I waive protest, demand and notice of non-payment on the within note, July 7th 1875.

W. H WOODS.

$7 paid on the within note July 30th 1875."

The defendant originally pleaded nil debet, to which he subsequently added the pleas of payment with leave, & c., and usury.

Upon the trial, before Orvis, A. L. J., it appeared that the note in suit was the renewal of a note which had been originally discounted by the bank for the benefit of the drawer on the 28th of August 1871, and had been renewed from time to time thereafter. It was also in evidence that the note was first discounted at the instance of Woods, who was a stockholder and director in the bank, and that upon the subsequent renewal the maker paid a discount in excess of the legal rate.

The defence was that the note by reason of the insertion of the clause " and five per cent. collection fee, if not paid when due," was not negotiable and therefore the defendant was not liable on his endorsement. The note was admitted in evidence under objection made on this ground.

The defendant submitted the following points, to which are appended the answers of the court:--

1. That under the evidence in this case the plaintiffs are not entitled to recover.

Answer. " We refuse to instruct you as requested in this point but instruct you directly the reverse, that they have a right to recover whatever may be due upon this debt."

2. That if the court refuse to instruct the jury as prayed for in the first point, then the defendant asks the court to instruct the jury that the defendant is not liable to pay the five per cent. for collection.

Answer. " We refuse to so instruct you. The contract in the note was, that if it was not paid at maturity, the maker, Steffey would pay five per cent. additional for collection fee. And Mr. Woods endorsed that contract and made himself liable to pay it if Steffey did not."

In their general charge, the court, inter alia, said:--

" It is urged on part of the defendant that the addition of these words, ‘ And five per cent. collection fee if not paid when due,’ destroys the negotiable character of this note, and relieves him from any liability upon it as an endorser. Objection was made to the admission of this note in evidence, and we now instruct you as matter of law, that the addition of these words does not destroy the negotiability of the note, and it does not release Mr. Woods, the defendant, from his liability as endorser upon it."

The verdict was for the plaintiff for $306.93; and after judgment the defendant took this writ, assigning for error the admission of the note in evidence, the answers to his points, and the foregoing portion of the charge.

D. W. Woods (with whom were Woods, p. p., and Williamson ), for plaintiff in error.--A promissory note must be for a fixed and certain sum, and not for an amount that is variable or subject to any contingency: Story on Bills, sect. 42; Story on Prom. Notes, sect. 20-27; 1 Parsons on Notes 37, 38; Bayley on Bills, ch. 1, sect. 6; Cook v. Saterlee, Redf. & Big.'s Lead. Cas. on Bills of Ex. and Prom. Notes 8; Philadelphia Bank v. Newkirk, 2 Miles 442; Patterson v. Poindexter, 6 W. & S. 227; Overton v. Tyler, 3 Barr 346; Sweeney v. Thickstun, 27 P. F. Smith 131; Ayrey v. Fearnsides, 4 M. & W. 168; Fralick et al. v. Norton et al., 2 Mich. 130. Here the clause, " and five per cent. collection fee if not paid when due," renders the amount uncertain and variable. On the day the note falls due the amount is $377; on the next day it is $395.85. Can it be contended for one moment that the amount to be paid is entirely certain? If a valid note, does the endorser know at the time of his endorsement which of these amounts he will be called upon to pay? What obligation was there upon the endorser to pay the five per. cent. for collection? His liability was fixed when he endorsed the note, and could neither be increased or diminished thereafter. If the note had a clause waiving the exemption laws, would his endorsement make this waiver the contract of the endorser?

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