§ 6.

Payment must not be conditional: particular fund.

'ABSOLUTELY': CERTAINTY OF TIME.

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It is an invariable rule, or a rule with at most but a single exception, that the promise or order must be absolute; any condition or contingency expressed in it would have the effect to reduce the instrument from the high level of the law merchant to the lower level of the common law.1 The condition or contingency need not appear in terms, 'upon condition,' if,' in the event that,' or the like, - in order to defeat the instrument as a contract of the law merchant; the same effect is produced if in substance and reality the promise or order is conditional or contingent. Thus, to make the paper payable out of some particular designated fund would have that effect, in ordinary cases, because the fund might not exist or be available at the time of payment. For example: One month from date I promise to pay to A or order $1000 out of the net proceeds of ore to be obtained from the mine in the lot of land this day conveyed to me by B' is not a promissory note, being payable upon the contingency of obtaining the required amount of ore out of the mine.* It makes no difference that the event upon which the promise or order is made happens, or that the particular fund exists and is available when payment is due, so that the promHappening of event named. ise or order may be binding; it is fatal to the contract as a contract of the law merchant that when the promise or order was made, payment was dependent upon condition or contingency. For example: Due K $1000 when he is twenty-one years of age is not a promissory note, though K lived to become, shortly afterwards, twenty-one."

1 N. I. L. § 10.

2 A savings bank order, in negotiable terms, but with the addition, even in the margin of the order, 'The bank book of the depositor must accompany this order,' is not negotiable. The words quoted make the order contingent on producing the bank book. White v. Cushing, 88 Maine, 339; Iron City Bank v. McCord, 139 Penn. St. 52.

8 Id.

4 Worden v. Dodge, 4 Denio, 159; Averett v. Booker, 15 Gratt. 163, 'out of any money in his [payee's] hands belonging to me.'

6 N. I. L. § 11, 3.

Kelley v. Hemmingway, 13 Ill. 604.

Specified fund.

It may be remarked that an order to pay over the whole or any part of a specified fund will ordinarily amount to an assignment of the same,' and that that of itself would be fatal to the conception of a bill of exchange or a cheque. A bill or a cheque can rise no higher than an undertaking; it signifies a debt, not a transfer of money or other property.

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Apart from statute, it will not affect the instrument under the law merchant that language is added to it, provided the additional language does not make the promise or order Added lanconditional or contingent. To add a provision for guage. reimbursement, in the case of an order to pay, would not affect the paper as a bill of exchange, for that would not be directing payment to be made out of the particular fund or source; and whether the fund or source for reimbursement existed or was available would make no difference. For example: 'Pay to the order of A $1000, one month from date, and reimburse yourself out of funds in your hands due me' is a bill of exchange, regardless of the reimbursement clause or of the existence of any debt due the drawer. Again: 'On the 1st of August next please pay to G or order £600, on account of moneys advanced by me to S,' is a bill of exchange regardless of the clause following the sum. So too the consideration for the undertaking may be stated, if no condition is created in the promise or order. For example: 'Pay to A or order $1000 one month from date, for stock' is a bill of exchange. It is perhaps immaterial, in the absence of statute, that the additional language may express a condition or contingency, provided that the condition or contingency is no part of the promise or order to pay. That is to say, to a note, a bill, or a cheque may be added a contract of the common law, as has already been stated.

1 See Attorney-Gen. v. Continental Ins. Co., 71 N. Y. 325. 2 N. I. L. § 10, 1.

Kelly v. Brooklyn, 4 Hill, 263; Coursin v. Ledlie, 31 Penn. St. 506; Corbett v. Clark, 45 Wis. 403.

♦ Griffin v. Weatherby, L. R. 3 Q. B. 753 (overruling Banbury v. Lisset, 2 Strange, 1211); N. I. L. § 10, 1.

See Coffman v. Campbell, 87 Ill. 98; N. I. L. § 10, 2.

It may sometimes require careful consideration to determine whether the additional language forms part of the promise or order. Thus, while it is clear that the fact that Referring to collateral se- it is recited in an instrument promising to curity. pay money, that other paper or property is deposited with it as collateral, and that the same may be sold if such instrument is not paid at its maturity, will not prevent that instrument from being a promissory note;1 still if it is recited in the instrument that the instrument itself is held as collateral, it will be perceived upon reflection that the contrary is true and that the promise is now made conditional. For example: Six months after date I promise to pay to the order of myself $2400, value received, to be held as collateral security for the payment of B's note, December 5th, 6 months, for $968.41,' and other notes, is not a promissory note; for in legal effect it is a promise to pay if the notes to which it is collateral are not paid. So too while an insurance note is not reduced to a contract of the common law by adding the words 'On policy 33,386,' the contrary would be true if the words were subject to the policy,' or the like."

But the Statute, following custom and hence pursuing sound theory, declares that an instrument which contains an order or a promise to do anything in addition to the payment of money is not negotiable, with certain exceptions, to wit: The order or promise may be coupled with an indication of a particular fund out of which reimbursement is to be made, or a declaration that a particular account is to be debited with the amount, or a statement of the transaction which has given rise to the instrument. The Statute also permits the addition of provisions authorizing the sale of collateral securities on non-payment of the instrument at maturity, for confessing judgment, for waiving any law intended for the benefit of the obligor, and for giving

1 N. I. L. § 12, 1.

2 Haskell v. Lambert, 16 Gray, 592.

Taylor v. Curry, 109 Mass. 36. The policy provided for a set-off of notes due the company.

• American Bank v. Blanchard, 7 Allen, 333.

6 N. I. L. § 10.

the holder an election to require something to be done in lieu of payment of money.1

nated.

The promise or order is not conditional, touching parties primarily liable, by reason of the fact that it designates a particular place of payment; nor is acceptance conditional Place of paytowards the acceptor, for designating a place of ment desigpayment. It is not necessary to make demand of payment at that or at any other place in order to fix the liability of the maker or the acceptor; it is the duty of such party to come and pay. For example: 'Three years and two months after date I promise to pay M or order, at the office of the Bank of the United States, at Nashville, $4880.99, value received,' is a promissory note, and not conditional, touching the liability of the maker, upon demand at the place named or anywhere else.3 Nor is an instrument payable on condition of demand, against parties primarily liable, though it is in terms payable on demand.' '

It is obvious, and the fact has already been noticed incidentally, that the promise or order is not performable absolutely if the time of payment is not certain to come to pass. Time of payFor example: 'I promise to pay to A or order ment. $1000 when the estate of B is settled up' is deemed not a promise to pay absolutely, because the estate of B may never be 'settled up.' Again: 'I promise to pay to A or order $1000 as soon as crops can be sold or the money raised from any other source' is not a promise to pay absolutely. Again: At sight after the arrival and discharge of coal per brig G pay to the

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1 N. I. L. § 12. Compare Kirkwood v. Smith, 1896, 1 Q. B. 582, on § 83 of the Bills of Exchange Act. With the American Statute compare § 3 (2), (3) of that Act.

2 N. I. L. § 77: Presentment for payment is not necessary in order to charge the person primarily liable on the instrument.' Id. § 147: 'An acceptance to pay at a particular place is a general acceptance, unless it expressly states that the bill is to be paid there only and not elsewhere.'

Wallace v. McConnell, 13 Peters, 136.

• Messmore v. Morrison, 172 Penn. St. 300. Husband v. Epling, 81 Ill. 172.

Nunez v. Dautel, 19 Wall. 560.

order of myself $1500, value received,' is not an order to pay absolutely.1

Certainty of time, however, does not mean a fixed and stated day of month and year; or as it is sometimes put, certainty here does not mean definiteness. Nothing is more common than promises to pay on demand,' or orders to pay 'at sight,' or at a certain time after sight;' sometimes indeed instruments are made payable after date' simply, or 'on demand after date. All such instruments are as good promissory notes or bills of exchange as if payment were to be made upon a day stated.

All that the law requires is that the time of payment shall be sure to arrive, as, for instance, in the case of a promise to pay on the death of a person named. Indeed, absolute certainty appears, by some decisions, not to be required; moral certainty being deemed sufficient, as in the case of a promise by the government to pay a sum when it pays certain other debts which it owes. But that doctrine cannot be founded upon any custom, and should be taken with hesitation.

Time not defined: on or before.'

Some confusion exists, as certain of the examples already given and others show, in regard to the meaning of the rule in cases in which the time of payment is left indefinite, without giving power to the holder to put an end to the indefiniteness. But by the better view such a state of things will not prevent the paper from being a promissory note (or a bill of exchange if one should ever be drawn in that way). If the time of payment is sure to come to pass sooner or later, that is enough; when, sooner or later, it does come to pass, the instrument may be sued upon, in case of breach, as a promissory note.

1 Grant v. Wood, 12 Gray, 220.

2 Hotel Lanier v. Johnson, 103 Ga. 604.

3 Hitchings v. Edmands, 132 Mass. 338; Foley v. Emerald Brewing Co., 61 N. J. 428; Crim v. Starkweather, 88 N. Y. 340. In the first of these cases the instrument is held (by a majority of the court) to be due at once on demand; in the other cases it is held payable only after some reasonable lapse of time after date.

✦ Andrews v. Franklin, 1 Strange, 24; Evans v. Underwood, 1 Wils. 262.