Court Opinion

ID: 3249513
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:20:50.164147+00
Date Added: 2024-06-11T13:40:28.319314
License: Public Domain

I am unable to concur in the decision of the majority in this case because, notwithstanding its attempted differentiation from the case of Strand Amusement Co. v. Fox, 205 Ala. 183,87 So. 332, 14 A.L.R. 1121, I think it destroys the principle of the Fox Case, and is in fact opposed to the unanimous views of all of the American courts that have dealt with this specific question.
That principle is that the statement on the face of a note, if otherwise negotiable in form, that it is given "as per contract," does not impair its negotiable quality.
With respect to this identical phrase, even where it occurs in the body of the note, the following cases are in accord with the Fox Case: Nat. Bk. of Newberry v. Wentworth, 218 Mass. 30,105 N.E. 626; Waterbury-Wallace Co. v. Ivey, 99 Misc. Rep. 260,163 N.Y. S. 719; Tyler v. Whitney-C. Tr.  Sav. Co.,157 La. 249, 102 So. 325; Snelling State Bank v. Clasen, 132 Minn. 404,157 N.W. 643, 6 A.L.R. 1663; First Nat. Bank v. Badham,86 S.C. 170, 68 S.E. 536, 138 Am. St. Rep. 1043; Internat. Finance Corporation v. N.W. Drug Co. (D.C.) 282 F. 920. And to these may be added Jury v. Barker, 4 Jur. N. S. 587, 120 Eng. Reprint, 580, by Lord Campbell, C. J.
The Louisiana court apparently limits the noneffect of this phrase on negotiability to cases where it appears in a sentence distinct from the sentence containing the promise to pay — a limitation not found in any other decision.
In the Fox Case we interpreted the phrase "as per" as meaning "in accordance with, or pursuant to." The following cases hold that a statement on the face of the note that it is given "in accordance with the terms" of a certain contract does not impair negotiability: Markey v. Corey, 108 Mich. 184,66 N.W. 493, 36 L.R.A. 117, 62 Am. St. Rep. 698; Continental Guaranty Co. v. People's Bus Line, 1 W. W. Harr. (Del.) 595, 117 A. 275; Doyle v. Considine, 195 Ill. App. 311. And in Old Colony Co. v. Stumpel, 126 Misc. Rep. 375, 213 N.Y. S. 536, it was held that the statement that the note was "given covering deferred installments under conditional sale contract for a motor vehicle" did not impair negotiability. This overwhelming array of authorities, speaking with a single voice, is ignored by the majority opinion.
That opinion conceives that the instant case can be distinguished from the Fox Case in two particulars: (1) That the reference clause is here found in the body of the note; and (2) that it states not only the fact, but also some the subject-matter, of the contract.
It must be observed that the promise to pay — the entire essential part of the note — is a separate and complete sentence and paragraph. The reference clause, a separate paragraph also, states that:
"This note is one of series of notes given [the payee] * * * covering balance of purchase price of retort plant as percontract between that corporation and the maker hereof dated May 16, 1921." *Page 262 
I am unable to see how it can be even plausibly contended that the words "as per," an adverbial phrase, can be referred to anything else than the giving of the note, or thecovering; that is, taking care of, the balance of the purchase price. Certainly, it means, because it declares, that the note "is given * * * as per contract," or is "covering the * * * purchase money as per contract." And to say that "as per" does not relate to either of its immediate antecedents, "covering" or "given," but, on the contrary, reaches back into the preceding paragraph and qualifies the promise to pay, is, to my mind, an impossible theory, which violates common understanding and every principle of grammatical construction.
The Negotiable Instruments Law (Code 1923, § 9031) declares that:
The "promise to pay is unconditional * * * though coupled with: * * * A statement of the transaction which gives rise to the instrument."
There is nothing in this that limits the fullness of the statement. Manifestly, it may include the substance of theentire transaction, without affecting negotiability, provided always that the "statement" itself does not show that thepromise to pay is conditional. It is the quality, not the quantity, of the statement that counts; and, of course, the qualification of the promise to pay must appear from the terms of the contract as stated, and not as an implication of law grounded upon the payee's contingent breach of the contract.
Here, then, we have a reference to the contract, a statement of the transaction which caused the giving of the note. Three things are shown: (1) That the note is one of a series, one of a number, of notes; (2) given to the payee for the balance of the purchase price of a retort plant; (3) as per; that is, according to or pursuant to, a contract between the parties dated May 16, 1921. The majority opinion impliedly concedes that if the reference clause were simply that the note was given "as per a contract between the parties dated May 16, 1921," negotiability would not be affected; or, if it were merely that the note was given "for the purchase price of a retort plant," it would be without effect; and equally without effect if it showed only that the note was "one of a series." How then can the three ciphers, added together, produce any result? The fact that the series of notes were given for the balance of the purchase money, "in accordance with," "pursuant to," or "as provided by," a contract of a certain date, does not qualify the promise to pay, and is no more than a statement of the reason and the occasion for the promise.
The promise to pay may be "coupled with" such a "statement" (Code, § 9031) without rendering it conditional. Obviously, this coupling must be by some connecting phrase; and in common parlance, and with the general sanction of the courts, "as per" has been adopted as appropriate for that purpose within the permission of the statute. What the majority are now holding is that an unqualified promise to pay is rendered conditional by an independent reference clause which shows no more than the name of the thing bought, the names of the parties, and the date of the contract of sale; this for the reason that "given as per" such a contract means given subject to its terms, whatever they may be. This, in my judgment, is a clear repudiation of what was decided in Fox v. Strand Amusement Co., supra, as well as in the numerous cases cited above, and is, also, a practical nullification of the statute above referred to.
The object and effect of such a reference is not to warn a purchaser of the note that the promise to pay is in fact contractually qualified by terms which do not appear, but to identify the consideration for the note, so that the maker will have conclusive evidence of its relationship to the contract, in the contingency of the payee's breach of any of its terms. In asserting such a breach as against the enforcement of the note by the payee, or even by a transferee, conclusive written evidence of the relation might be of the highest value.
                        On Appellees' Rehearing.