CHAPTER 52 EXPRESSION-NEGOTIABLE FORM (2) PROVISIONS AND OMISSIONS NOT AFFECTING § 419. In general. NEGOTIABILITY § 420. Provision authorizing sale of collateral security. § 421. Reference to mortgage given as security. § 422. Provisión authorizing confession of judgment. § 423. § 424. Waiving benefit of exemption and similar laws. § 425. Omission of date. § 426. Ante-dating and post-dating. § 427. Technical rules of construction. § 419. In general. Case 438. Uniform Negotiable Instruments Act, Sec. 5. "An instrument which contains an order or promise to do an act in addition to the payment of money is not negotiable. "But the negotiable character of an instrument otherwise negotiable is not affected by a provision which: "1. Authorizes the sale of collateral securities in case the instrument be not paid at maturity; or "2. Authorizes a confession of judgment of the instrument be not paid at maturity; or "3. Waives the benefit of any law intended for the advantage or protection of the obligator; or "4. Gives the holder an election to require something to be done in lieu of payment of money. "But nothing in this section shall validate any provision or stipulation otherwise illegal." Question 438: (See the following cases and questions.) § 420. (Nego. Instru., Sec. 29.) Provision for sale of collateral security. Case 439. Perry v. Bigelow, 128 Mass. 129. Facts: Contract on the following promissory note signed by the defendant and endorsed by payee: 66 "$5,000. St. Louis, Mo., January 11, 1877. "Four months after date I promise to pay to Frank F. Iglehart, cashier, or order, at the banking house of Bartholew, Lewis & Co., in St. Louis, Mo., five thousand dollars, for value received, negotiable and payable without defalcation or discount, and with interest from maturity at the rate of ten per cent per annum, I having deposited with him as collateral security the following described certificates of the capital stock of the Scotia Lead Mining Company, No. 40 for 25 shares; 41 for 25 shares; 42 for 25 shares; 43 for 50 shares; 44 for 130 shares, and 39 for 25 shares, aggregating 280 shares. And hereby authorize him to sell the same at public or private sale or otherwise at his option, on the non-performance of this promise, without notice, and authorize him to use, transfer or hypothecate, the same at his option, he being required, on payment of the amount loaned as specified herein, and at any time before said collateral security shall have been sold, or surrender the same.' (Remainder of facts omitted.) AMES, J.: "The defendant's written contract was a negotiable promissory note, requiring him to pay a certain sum of money at a definite time. Question 439: What does this case decide? § 421. (Nego. Instru., Sec. 30.) Reference to mortgage given as security. (See Case No. 412, supra, also note to Case No. 430 supra.) § 422. Provision authorizing confession of judgment. Case 440. Wisconsin Yearly Meeting vs. Babler, 115 Wisconsin Reports, 289. Facts: This was an action in equity, brought by respondent, a corporation, to set aside the sale and transfer to the appellant of a certain promissory note and mortgage, which was the property of the respondent and to recover the possession of the same. The note contained a power of attorney which authorized a confession of judgment at any time thereafter, whether due or not. Point Involved: Whether a power of attorney to confess judgment at any time on the note whether due or not, renders the note non-negotiable. WINSLOW, J.: "It is entirely clear from the evidence in the case and from the findings of fact that the note and mortgage were the property of the plaintiff corporation, and that no express authority had ever been given to Sears to sell them. Those being the facts, the defendant, Babler, could acquire no title to the note by this transaction with Sears unless the note was negotiable paper, or unless Sears had either the apparent ownership or apparent authority to sell it, so that the corporation would be estopped to deny the act. It is quite certain the note was not negotiable, because by the power of attorney it contained judgment could be entered upon it at any time after its date, whether due or not. Thus the time of payment depends upon the whim or caprice of the holder, and is absolutely uncertain. This deprives the note of its negotiabilty. Ch. 356, Laws of 1879 (the Negotiable Instruments Law), provides that the negotiable character of an instrument is not affected by a provision authorizing a confession of judgment if the instrument is not paid at maturity. Sec. 1675-5, subd. 2. Upon familiar principles of statutory construction this provision makes a note like the present non-negotiable. Question 440: What is a judgment note? Does it necessarily make a note non-negotiable? What was the holding in this case? When will a confession of judgment clause have no effect on negotiability? (Note: In Illinois, a provision authorizing a confession of judgment at any time (even before maturity) does not destroy negotiability. The N. I. L. as adopted in Illinois recognizes the local practice and states that the negotiability of an instrument is not affected by a provision authorizing a confession of judgment, leaving out "if not paid at maturity.") § 423. (Nego. Instru., Sec. 32.) Waiver of benefit of exemption laws. . Case 441. Zimmerman v. Anderson, 67 Pa. 421. "$125.00. Town of Buffalo, March 25th, 1868. "Six months after date I promise to pay to G. W. Lowe, or order, one hundred and twenty-five dollars for value received, with interest, waiving the right of appeal and of all valuation, appraisement, stay and exemption laws. MOSES ANDERSON." It was contended the note was not negotiable. Point Involved: Whether a waiver in an instrument of benefit of exemption and similar laws, renders the note non-negotiable. READ, J.: But it is urged that the words 'waiving the right of appeal, and of all valuation, appraisement, stay and exemption laws' destroy its negotiability. In what way? They do not contain any condition or contingency but after the note falls due and is unpaid, and the maker is sued, facilitate the collection by waiving certain rights which he might exercise to delay or impede it. Instead of clogging its negotiability it adds to it, and gives additional value to the note. Question 441: What did the court decide in this case? (Note: Whether the waiver of the exemption law is valid is another question. Whether valid or not, it does not destroy negotiability. In some states certain exemption laws intended to prevent the debtor from becoming a charge on the state cannot be waived by the debtor, especially exemption in wages intended not only for the debtor's benefit but also the benefit of his family.) § § 424 to 426. (Nego. Instru., Secs. 33 to 35.) Seal, omission of date, antedating and postdating. Case 442. Uniform Negotiable Instruments Act, Secs. 6, 10-13. "Sec. 6. The validity and negotiable character of an instrument are not affected by the fact that: "1. It is not dated; or "2. Does not specify the value given, or that any value has been given therefor; or "3. Does not specify the place where it is drawn or the place where it is payable; or "4. Bears a seal; or "5. Designates a particular kind of current money in which payment is to be made. "But nothing in this section shall alter or repeal any statute requiring in certain cases the nature of the consideration to be stated in the instrument. "Sec. 10. The instrument need not follow the language of this Act, but any terms are sufficient which clearly indicate an intention to conform to the requirements hereof. "Sec. 11. When the instrument or an acceptance or any indorsement thereon is dated, such date is deemed prima facie to be the true date of the making, drawing, acceptance or indorsement, as the case may be. "Sec. 12. The instrument is not invalid for the reason only that it is antedated or postdated, provided this is not done for an illegal or fraudulent purpose. The person to whom an instrument so dated is delivered acquires the title thereto as of date of delivery. "Sec. 13. When, an instrument expressed to be payable at a fixed period after date is issued undated, or where the acceptance of an instrument payable at a fixed period after sight is undated, any holder may insert therein the true date of issue or acceptance, and the in |