INSTRUMENT PAYABLE in EXCHANGE IS NOT NEGOTIABLE. § 4-4. First Nat. Bank v. Slette (1897), 67 Minn. 425, 64 Am. St. Rep. 429. Carmody & Leslie and F. H. Peterson, for appellants. START, C.J. This action is based upon an obligation, which is substantially in these words: "$1,673. HALSTAD, MINN., July 26th, 1894. "For value received, we promise to pay to the order of the John Good Cordage & Machine Company the sum of sixteen. hundred and seventy-three dollars, as follows: Payable by New York or Chicago exchange. $560, Nov. 15th, 1894; $560, Dec. 1st, 1894; $560, Dec. 15th, 1894. Without interest, if paid as due; if not, then legal rate from date until paid." The only question on this appeal is whether this is a negotiable instrument under the law merchant. It is absolutely essential, in order to constitute a promissory note under the law merchant, that the promise be to pay in money. If this instrument can be construed as an absolute promise to pay in money $1,673, with exchange, it is negotiable; otherwise, not. Hastings v. Thompson, 54 Minn. 184, 55 N. W. 968. The case of Bradley v. Lill, 4 Biss. 473, Fed. Cas. No. 1,783, is the only one to which our attention has been called, where the language of the instrument was similar to the one under consideration. In the case referred to the note was made in Chicago, and was payable at New York, "in" exchange; and it was held that the note was negotiable, upon the ground that the promise was to pay the sum named in the note, "with" exchange, which was a mere incident to the debt. In the case at bar the note is not payable at any particular place, and the promise is, not to pay a given number of dollars in money "with"-that is, plus-the current rate of exchange, but it is to pay the sum named in the note by New York or Chicago exchange. The holder of this instrument cannot demand in payment thereof $1,673 in money, plus the cost of exchange; for the maker is not bound to discharge his obligation except by means of inland bills on New York or Chicago. Nor can the maker tender in payment $1,673 in money, with the cost of exchange; for his promise is to make payment by inland bills, which he must purchase in the market. The instrument, then, is not payable in money, and is, therefore, not a promissory note, within the law merchant. Easton v. Hyde, 13 Minn. 83 (90); Jones v. Fales, 4 Mass. 245; Irvine v. Lowry, 14 Pet. 293; I Daniel, Neg. Inst. §§ 55, 56; Tied. Com. Paper, § 29; 1 Rand. Com. Paper, § 90. In reaching this conclusion we have not been unmindful of the fact that, in commercial usage, bills of exchange are regarded as substitutes for money; but this usage cannot make them such. Order reversed, and a new trial granted. THE SUM IS CERTAIN THOUGH PAYABLE WITH COSTS OF COLLECTION OR AN ATTORNEY'S FEE. § 4-5. Oppenheimer v. Bank (1896), 97 Tenn. 20, 56 Am. St. Rep. 778. Appeal in Error from Chancery Court of Gibson County. MCALLISTER, J. Complainants filed this bill to enjoin the defendant bank from prosecuting three several suits before a Justice of the Peace, for the collection of certain promissory notes. It is charged in the bill that said notes were procured by fraud and are without consideration, and that the bank received the notes from the payees with actual or constructive notice of the fraud. It is further charged said notes were not negotiable, for the reason that each contained a stipulation for the payment of reasonable attorney's fees, and that said bank is not protected in its title to said notes as an innocent holder for value in due course of trade. The Chancellor, upon final hearing, was of opinion that the defendant bank purchased said notes without actual or constructive knowledge of the fraud, but held that the stipulation in respect of attorney's fees, destroyed the negotiability of said instruments, and thereby defeated the claim of said bank; that it was an innocent holder for value within the meaning of the law merchant. The Court decreed that said notes had been procured by fraud and were void in the hands of defendant bank, and perpetually enjoined their collection. The bank appealed, and has assigned as error the action of the Chancellor in adjudging said notes non-negotiable on account of the stipulation in respect of attorney's fees. The facts out of which the present controversy has arisen may be briefly stated. The record discloses that Curtis Bros. were the proprietors of a patent churn, which they were engaged in selling in Gibson County. Complainants purchased of Curtis Bros. the exclusive right to sell this churn in the State of Louisiana and certain counties of Mississippi, for which they agreed to pay the sum of $2,000, evidenced by four notes, each for the sum of $500, and payable, respectively, in seven, eight, nine, and ten months from date. The following is a specimen of the notes in controversy, viz.: "TRENTON, TENN., June 3, 1889. "Nine months after date we promise to pay to the order of Curtis Bros., or bearer, the sum of five hundred dollars, negotiable and payable at the Exchange Bank of Trenton, Tenn., for value received. The drawers and indorsers severally waive presentment for payment, protest, and notice of protest and nonpayment of this note, and, in case of suit, agree to pay all reasonable attorney's fees for collecting the same. "$500 due February 3, 1890. "L. OPPENHEIMER, “R. F. Ross, "H. R. CAMP." On the twenty-seventh and twenty-eighth of June, 1889, three of these notes were purchased by the defendant bank at a discount of twenty per cent.-that is to say, the bank paid twelve hundred dollars for the three notes of the aggregate face value of fifteen hundred dollars. H. R. Camp, one of the signers of the notes, was in the employment of Curtis Bros. in the capacity of salesman, and negotiated the sale to Oppenheimer of the exclusive right to sell this churn in Louisiana and Mississippi. It was agreed between the original parties, at the time the notes were executed, they were not to be transferred, and were alone payable out of the profits of the new business. Curtis Bros., Camp, and Ames, soon after the execution of the notes, left the state clandestinely, and their whereabouts is unknown. The proof abundantly shows that Curtis Bros. were in collusion with Camp, and that said notes were procured to be executed upon false and fraudulent representations, and as between the original parties there was a total failure of consideration. The defendant bank, however, relies upon the plea of innocent purchaser for value before maturity, in due course of trade, and without notice. Defendant's counsel insist that, complainant not having appealed from the ruling of the Chancellor that the bank had no actual or constructive notice of the fraudulent conduct of the payees in procuring the execution of the notes, this question cannot be reopened in this court. But this position is manifestly erroneous, since, upon the appeal of the bank, the whole case is open for re-examination, and if the decree. in favor of complainant is found correct upon any ground, although incorrect upon the ground assigned by the Chancellor, we should affirm it. The contention of learned counsel for complainant is that the purchase of the notes in suit from strangers at a discount of twenty per cent., when the bank knew that Oppenheimer, one of the makers, was perfectly solvent, indicates knowledge of the fraud, or that the bank had such constructive notice as to put it upon inquiry. As said by this court: "When the indorsee takes negotiable paper before maturity under circumstances which might reasonably create a suspicion that it was not good-as, where he buys a note on a solvent man, having less than one year to run, for $333.33 at $125, with an agreement to pay $25 more if collected without suit, he takes it at his peril and subject to the equities between the original parties." Hunt v. Sanford, 6 Yer., 387; 7 Heis., 163. Says Mr. Tiedeman, in his work on Commercial Paper, Sec. 291: "It is said that inadequacy of price paid for negotiable paper may be so gross as to justify the conclusion that the purchaser is charged with notice of a fraudulent or defective title on the part of the vendor. And it has been held there was constructive notice of fraud or of some other equally effective defense to the paper where the purchaser paid $125 for a note of $333.33, $50 for a note of $300, $5 for a note of $300. On the other hand, it has been held that the purchaser of a commercial instrument was a holder for value, and hence took it free from equitable defenses, when he paid $100 for a note of $250, $50 for a note of $100, or $12.50 for a note of $25. It is certain that a purely nominal consideration would not make the purchaser a holder for value. And it may be stated, subject to an explanation of terms, that an inadequate price always puts the person upon inquiry and may, certainly, along with other suspicious circumstances, charge him with notice of existing defenses. But every price is not inadequate which is less than the face value of the instrument purchased. Commercial paper of every kind has its commercial value, rising above or falling below par, according to the financial credit of the person liable on it. Only that price is inadequate which falls below the market value, and if the disproportion between the price paid and the market value be very great, it is fair and just to presume that the purchaser had rea sonable grounds for suspecting fraud or some other defense to the instrument. Each case must, therefore, stand on its own merits. One-half the face value may, under some circumstances, be a grossly inadequate price, while, under different circumstances, it may be greatly in excess of what the instrument is worth on the market." Tiedeman, Sec. 291. We think the rule laid down by Mr. Tiedeman is sound, and furnishes an intelligible basis for the determination of what constitutes inadequacy of price in the purchase of commercial paper. We cannot say, however, in view of this rule and the proof in the record, that there was any such gross disparity between the commercial value of the notes and the price actually paid, as to awaken suspicion in the minds of the officers of the bank of any infirmity in the paper. The proof shows that this bank was accustomed, during this time, to discount paper at rates varying from twelve to twenty-five per cent. per annum, and that it had, prior to this time, discounted paper held by these payees on other solvent parties at such rates. It was also insisted in argument that H. R. Camp, one of the makers of the notes, negotiated the sale of this paper to the bank, and that this fact was sufficient to put the purchaser upon inquiry. Nothing can be predicated upon this position, for the reason that it does not distinctly appear from the record whether it was Ames or Camp who sold the notes to the bank. The officers of the bank who purchased the paper, are unable to state which of these parties conducted the transaction, and there is no other proof in the record on the subject. We hold, however, this feature unimportant in this case. We find no facts or circumstances in the record fixing the bank with knowledge, actual or constructive, of the fraudulent character of the paper, and the holding of the Chancellor in respect of this proposition is correct. The next question presented is whether the stipulation in respect of payment of attorney's fees, written in the face of the note, destroys its negotiability and thus dismantles the note, allowing proof of fraud in its execution. The question presented has given rise to much judicial controversy, and the decisions announced in different states and jurisdictions are by no means reconcilable, and, since the question is one of first impression in this state, we shall, after a review of the authorities, adopt that view which most commends itself to our reason and judgment. Mr. Tiedeman, in the work already cited, Commercial Paper, Sec. 28 (b), says: "Bills and notes, particularly the latter, sometimes contain stipulations that, if not paid voluntarily, the drawer |