Court Opinion

ID: 7096484
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:11:31.578427+00
Date Added: 2024-06-11T16:13:15.913366
License: Public Domain

Beck, J.,
dissenting. — Under oUr statute a promissory note for property, in order to be negotiable, must be made so by words or terms expressing such intention of the parties; the *111words “ bearer ” or “ order,” in the body of the note are not sufficient for that purpose. In my judgment, the words “ without defalcation,” do not express the thought that the note is intended to be negotiable. Admit that the word defcileaMon possesses the meaning given it by Bouvier, yet it does not make the note negotiable. A party to a contract may bind himself that the obligation created thereby shall not be subject to abatement or set-off, on account of any claims he holds against the other party, and the contract may be subject to assignment carrying all the rights of the original obligee to enforce it. But this alone would not make the instrument negotiable. The law as to the obligation and rights of indorsers and holders and the rules relating to presentment, demand, etc., as well as the rules forbidding inquiry into the consideration when the instrument is in the hands of an indorsee, would not apply to the instrument. In this view the conclusions of the opinion, in my judgment, are not sound, and its language and the inferences to be drawn therefrom are not correct.
But I am of the opinion that the expression, “ without defalcation,” cannot be construed into a contract to the effect that no abatement or set-off can be made to the note. Certain I am that neither lawyers nor business men .so understand the language. The interpretation put upon it, to make it so mean, is purely artificial and entirely arbitrary. It was introduced in that character in the Pennsylvania statute, and was evidently adopted by the courts of that State because of statutory recognition of the words and their meaning. It is evidently a strained construction of the language for a supposed good purpose; a thing sometimes done by courts but never to be justified. . The Pennsylvania cases are briefly stated in the opinion of the majority, but attention on the part of the reader will enable him to ascertain their drift and purpose. By force of statutes of New Jersey and Missouri, the words have the meaning claimed for them by the majority opinion, when used in promissory notes made in those States.
Another consideration in support of my view ought to be stated. If the maker of a note, by the use of the words, contracts to pay (substituting the meaning ot the term “ without *112defalcation” adopted m tbe foregoing opinion,) “without reduction of the claim by deducting from it a smaller claim due from the payee,” how can the language be applied to the case of an utter failure of consideration, or of a partial failure. Certainly one may agree that he will not set up a claim for reduction of the amount he obligates himself to pay by a contract, on account of any existing demand he holds against the obligee, yet he ought not to be held bound by such an agreement to abandon all defense against a suit by the obligee, or his assignee, based upon his fraud, deceit, default or other matter, whereby the obligor is deprived, in whole or in part, of the benefit of the contract.
For these reasons I cannot concur in the foregoing opinion.