ARTICLE II. FORM AND INTERPRETATION. Section 20. Form of negotiable instrument. 23. Determinable future time; what constitutes. 24. Additional provisions not affecting negotia bility. 25. Omissions; seal; particular money. 26. When payable on demand. 27. When payable to order. 34. Incomplete instrument not delivered. 35. Delivery; when effectual; when presumed. name. 38. Signature by agent; authority; how shown. 39. Liability of person signing as agent, et cetera. 40. Signature by procuration; effect of. 41. Effect of indorsement by infant or corporation. 42. Forged signature; effect of. § 20. Form of negotiable instrument.-An instrument to be negotiable must conform to the following requirements: 1. It must be in writing (a) and signed by the maker or drawer. 2. Must contain an unconditional promise (b) or order to pay a sum certain in money (c); 3. Must be payable on demand (d), or at a fixed or determinable future time (e); 4. Must be payable to order (f) or to bearer (g); and 5. Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty (h). (a) The writing may be in pencil. Brown v. Butchers' Bank, 6 Hill, 443. (b) See section 22. (c) This is the rule of the law merchant, and the rule which prevails in most of the States. In some States- as, for example, in Georgia certain instruments are declared by statute to be negotiable, though they provide that payment is to be made in goods or merchandise. See also section 25, subdivision 5. In New York warehouse receipts issued by certain corporations are declared to be negotiable. See Hanover Nat. Bank v. American Dock and Trust Co., 148 N. Y. 612; Corn Exchange Bank v. Same, 149 N. Y. 174. The act does not repeal these statutes. An instrument which, by its true construction, is an unconditional order to pay a certain sum of money at a fixed future time, to the payee or order, is a bill of exchange under the terms of the statute. Torpey v. Tebo, 184 Mass. 307. (d) See section 26. (e) See section 23. (f) See section 27. The North Carolina Act reads: "Must be payable to the order of a specified person or bearer." The words "specified person" are surplusage, since by section 27 this is de clared to be the effect of the term order." (g) Yingling v. Kohlhass, 18 Md. 148; Curtis v. Hazen, 56 Conn. 146. If the instrument is payable to a particular person, and not to his order or to bearer, it is not negotiable. Backus v. Danforth, 10 Conn. 297. As to bonds payable to bearer and coupons, see Carr. v. Leferre, 27 Pa. St. 413; County of Beaver v. Armstrong, 44 Pa. St. 63; National Exchange Bank v. Hartford, etc., R. R. Co., 8 R. I. 375. As to Treasury notes, see Frazer v. D'Quilliers, 2 Pa. St. 200. See section 28. An instrument which is not payable to order or bearer is not within the terms of the statute. Westberg v. Chicago L. & C. Co., 117 Wis. 589. In Tennessee the Act has repealed Shannon's Code, § 3506, providing that every note, whether payable to order or not, should be negotiable in the same manner as promissory notes. Gilley v. Harrell (Tenn.), 101 S. W. Rep. 424. (h) See section 215. § 21. Certainty as to sum; what constitutes. The sum payable is a sum certain within the meaning of this act, although it is to be paid: I. With interest; or 2. By stated instalments (a); or 3. By stated instalments, with a provision that upon default in payment of any instalment or of interest (b), the whole shall become due; or 4. With exchange, whether at a fixed rate or at the current rate (c); or 5. With costs of collection or an attorney's fee, in case payment shall not be made at maturity (d). (a) Markey v. Corey, 108 Mich. 184; Wright v. Irwin, 33 Mich. 32. In this case the note was for $1500, to be paid twenty per cent. a month from the 1st of July, 1871. (b) For a case arising under the provisions of the Wisconsin Act, see Hodge v. Wallace, 129 Wis. 84. (c) Second National Bank of Aurora v. Basuier, 65 Fed. Rep. 58; Hastings v. Thompson, 54 Minn. 184; Flagg v. School District, 4 N. D. 30; Whittle v. Fond du Lac National Bank (Tex.) 26 S. W. Rep. 1106. Contra, Culbertson v. Nelson, 93 Iowa 187. (d) As to this point there has been much conflict in the decisions. The rule adopted in the Act is the one sustained by the weight of authority. It is supported by National Bank v. Sutton Mfg. Co., 6 U. S. App. 312, 331; Oppenheimer v. Farmers and Merchants' Bank, 97 Tenn. 19; Montgomery v. Crossthwait, 90 Ala. 553; Trader v. Chichester, 41 Ark. 242; Stapleton v. Louisville Banking Co., 95 Ga. 802; Dorsey v. Wolff, 142 Ill. 589; Stoneman v. Pyle, 35 Ind. 103; Shenandoah Nat. Bank v. Marsh, 89 Iowa 273; Benn v. Kutzschan, 24 Oregon 28; Seaton v. Scoville, 18 Kans. 433; Dietrich v. Boylie, 23 La. Ann. 767; Second National Bank v. Anglin, 6 Wash. 403; Heard v. Dubuque Bank, 8 Neb. 10; Stark v. Olsen, 44 Neb. 646. The courts which have sustained this rule have taken the view that so long as the amount payable is certain up to the time of maturity and dishonor, it is not essential that after that time, when the instrument has become non-negotiable for other reasons, the certainty as to the amount should continue. In the Tennessee case above cited the court said: "Upon a careful review of the authorities, we can perceive no reason why a note otherwise imbued with all the attributes of negotiability is rendered non-negotiable by a stipulation which is entirely inoperative until after the maturity of the note and its dishonor by the maker. The amount to be paid is certain during the currency of the note as a negotiable instrument, and it only becomes uncertain after it ceases to be negotiable by the default of the maker in its payment. It is eminently just that the creditor who has incurred an expense in the collection of the debt should be reimbursed by the debtor by whom the action was rendered necessary, and the expense entailed." The statute has changed the law in Maryland (Maryland Fertilizing Co. v. Newman, 60 Md. 584); North Carolina (First National Bank v. Bynum, 84 N. C. 24); Pennsylvania (Woods v. North, 84 Pa. St. 407). See also Jones v. Rodetz, 27 Minn. 240; First Nat. Bank v. Gay, 63 Mo. 38; First Nat. Bank v. Larsen, 60 Wis. 206; Morgan v. Edwards, 53 Wis. 599; Sylvester Bleckley Co. v. Alewine, 48 S. C. 308. The question does not appear to have been passed upon by the New York courts. In some States a stipulation to pay a specified percentage as an attorney's fee is void. Levens v. Briggs, 21 Oregon 333. The statute, probably, does not change the law of these States, since it does not attempt to validate such provisions, but merely declares that their presence in the instrument shall not affect its negotiable quality. § 22. When promise is unconditional.- An unqualified order or promise to pay is unconditional within the meaning of this act, though coupled with: I. An indication of a particular fund out of which reimbursement is to be made, or a particular account to be debited with the amount; (a) or 2. A statement of the transaction which gives rise to the instrument (b). But an order or promises* to pay out of a particular fund is not unconditional (c). 66 (a) The mere mention of a fund in a draft does not necessarily deprive it of the character of commercial paper, but it must further appear, in order to have such effect, that it contains either an express or implied direction to pay it therefrom, and not otherwise. Schmittler v. Simon, 101 N. Y. 554, 560. In the case cited, a draft drawn upon an executor contained the words, "and charge the amount against me and of my mother's estate." It was held that the reference to the estate was not a direction to pay out of it, but that the estate was referred to simply as a means of reimbursement. So, in Macleod v. Luce, 2 Stra. 762; 2 Ld. Raym. 1481, where the instrument contained the words, as my quarterly half-pay, to be due from 24th of June to 27th of September next, by advance," the court said, "The mention of the half-pay is only by way of direction how he shall reimburse himself, but the money is still to be advanced on the credit of the person;" and the court accordingly held the instrument to be a bill of exchange. Likewise, in Redman v. Adams, 51 Me. 433, where the drawer added, "and charge the same against whatever amount may be due me for my share of fish," it was held that these words were a mere indication of the means of reimbursement, and did not destroy the negotiable character of the draft. And a similar ruling was made in Whitney v. Eliot National Bank, 137 Mass. 351, where the directions were, charge the same to account of 250 bbls. meal exschooner "Aurora Borealis." See also Nichols v. Ruggles, 76 Me. 27. The test is whether the drawee is confined to the particular fund, or whether, though a specified fund is mentioned, he could have the power to charge the bill up to the general account of the drawer, if the designated fund should turn out to be insufficient. Munger v. Shannon, 61 N. Y. 251, 255. A draft in the following form: 'Pay to the order of the First National Bank of Hutchinson, Kansas, $1,500 on account of contract between you and the Snyder Plaining Mill Company" was held negotiable, the words. on account of," etc., being deemed an indication of the fund to which the drawee was to look for reimbursement, and not a direction to charge a particular fund. First Nat. Bank of Hutchinson v. Lightner, 74 Kans. 736. 66 (b) For example, a note expressed to be in payment of certain * Error in engrossing. |