Court Opinion

ID: 3225178
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:02:08.000362+00
Date Added: 2024-06-11T07:40:01.897643
License: Public Domain

The prevailing opinion shows the note in verbis. The most serious insistence of appellants from the beginning has been that the writing on the margin of the note at the top rendered it nonnegotiable. I have been unable to see that the writing referred to, viz., "This note was given to reimburse the German Bank for Cert. of deposit No. 1187 for $5,000.00, due April 17, 1915," restrained or qualified the indisputably unconditional contract evidenced by the body of the instrument.
"The true test in every case under the Negotiable Instruments Law, as well as at common law, is whether the general credit of the maker or drawee accompanies the instrument. If it does, the instrument is negotiable; otherwise it is not." 3 R.C.L. p. 885. *Page 260 
An unqualified order or promise to pay is unconditional within the meaning of the Negotiable Instruments Law, "though coupled with a statement of the transaction which gives rise to the instrument." Code, § 4960. This section of the statute is held to be declaratory of the common law. Hutchinson National Bank v. Lightner, 74 Kan. 736, 88 P. 59,8 L.R.A. (N.S.) 231, 118 Am. St. Rep. 353, 11 Ann. Cas. 596. And in general, the negotiability of instruments is favored by the courts. 7 Cyc. 575, where our case of Goodwin v. McCoy, 13 Ala. 271, is cited. An application of these rules is seen in First Nat. Bank of Snohomish v. Sullivan, 66 Wn. 375, 119 P. 820, Ann. Cas. 1913C, 930, where it was held that a promissory note was not deprived of its commercial quality by its recital that —
"This note is given to take up the freight and rehandling of N. P. Car 43607 and proceeds from resale of said car shall apply to this note."
The court cited, among a good number of others, our case of Louisville Banking Co. v. Gray, 123 Ala. 251, 26 So. 205,82 Am. St. Rep. 120. And in Chicago Railway Equipment Co. v. Merchants' National Bank, 136 U.S. 268, 10 Sup. Ct. 999,34 L.Ed. 349. it was held that the negotiable character of a promissory note was not affected by a provision that it was given with others in payment for certain cars, the title to which should remain in the payee until all the notes of the series should be paid. The court said:
"The transaction is, in legal effect, what it would have been if the maker, who purchased the cars, had given a mortgage back to the payee, securing the notes on the property until they were all fully paid. The agreement, by which the vendor retains the title and by which the notes are secured on the cars, is collateral to the notes, and does not affect their negotiability. It does not qualify the promise to pay at the time fixed, any more than would be done by an agreement, of the same kind, embodied in a separate instrument, in the form of a mortgage."
And the court cited a number of cases which hold that where a note secured by a mortgage is transferred to a bona fide holder for value, and a bill is filed to foreclose the mortgage, no other or further defenses are allowed against the mortgage than would be allowed were the action brought in a court of law upon the note. Other cases to the same effect as the cases supra are cited in Crawford's Annotated Negotiable Instruments Law, p. 12. Post v. Kinzua Hemlock Railway Co.,171 Pa. 615, 33 A. 362, seems to be at variance with these authorities; but that case was decided long before the enactment of the Negotiable Instruments Law was adopted in this state, which, as has appeared, at this point followed the common law as it has been declared in this and other states and by the Supreme Court of the United States.
I concur fully in the proposition of the prevailing opinion, viz., the determination of the negotiability vel non of the instrument must depend upon a construction of its terms at the time of its execution and delivery, not upon what may happen subsequently. Therefore, passing upon the negotiability of this paper, I see no occasion to refer to what happened subsequent to its negotiation, and I am indifferent — properly so, I conceive — to the statement of the Hanover Bank to the effect that this paper did not represent borrowed money. There is no law that borrowed money alone may constitute the consideration of negotiable paper. Nor am I, though not lacking in sympathy for the parties who put this paper on the market, able to follow the argument which would make this promise to be conditional by reason of the use of the word "reimburse" used in the so-called indorsement of the note; for, I take it, every promissory note, negotiable or nonnegotiable, is given to reimburse somebody for something, it may be credit only. As it appears to me the indorsement here is nothing more than "a statement of the transaction which gives rise to the instrument" — such a statement as, according to the statute, does not render a promise to pay conditional.
I have examined also the other assignments of error in this cause, and while I have found in them no reason for a reversal, a statement of them would serve no purpose. My judgment is that appellants put a negotiable paper in the hands of the Bank of Cullman and have no sufficient answer to the claim of appellee, who stands in the place of a bona fide holder for value before maturity.
I think the judgment should be affirmed.
SOMERVILLE and GARDNER, JJ., concur in the foregoing. *Page 261