Hope v. Barker

Gill, J.

We are asked by this appeal to say whether the following is a negotiable promissory note, viz.:

“§194.25. Lee’s Summit, Mo., December 14,1887.

“ One year after date I promise to pay to the order of Dell Barker, agent, one hundred and ninety-four and twenty-five-hundredths dollars, without interest thereon if paid at maturity. If not paid at maturity to bear ten-per-cent, interest from date. For value received. Negotiable and payable at the Bank of Belton, Belton, Missouri. John E. Watson.”

In my opinion the writing contains, on its face, that certainty as to the amount to be paid necessary to constitute it a negotiable promissory note. “Paper, to be negotiable under the law merchant, must define by its terms what the obligation of the maker is, so that as it passes from hand to hand in the business of the world, it may be ascertainable from the face of the instrument what is demandable from the maker. Windsor Sav. Bank v. McMahon, 38 Fed. Rep. 286. Now, this instrument, absolutely and definitely, declares on its face just what amount shall be paid by the maker at any given time. The stipulation, of no interest to be charged if paid promptly at maturity, but ten-per-cent, from date if not so paid, was intended to encourage prompt payment, and to fix by agreement the damages of default. Interest is defined as the legal compensation or damage allowed for the detention of a debt. ;2 Edw. *634Bills & Notes, sec. 1000. This “legal compensation or damage ” for the detention of a sum of money, admitted to be owing, in the absence of an express argument between the parties, is generally fixed by statute in the several states. In Missouri the rate is six per cent. However, the parties may legally stipulate for a greater amount as liquidated damages for the non-payment of a debt. It is immaterial whether this damage, so liquidated, agreed upon and expressed, is denominated a penalty or interest. It is entirely proper for the parties contracting to stipulate for interest from date by way of penalty or damage for failure to pay at maturity of the note. 2 Edw. Bills & Notes, sec. 1007, cases cited, note 3; Cutter v. Howe, 8 Mass. 257; Daggett v. Pratt, 15 Mass. 177; Hackenbarry v. Shaw, 11 Ind. 392; 2 Parsons, Notes & Bills, 413. “A negotiable promissory note must be certain as to amount. It is so certain when the sum to become absolutely payable upon it at any gioen time is ascertainable upon its face.” Smith v. Crane, 33 Minn. 144; Towne v. Rice, 122 Mass. 73. It is ascertainable from the face of the note here discussed just what is called for at any given time. At its maturity (December 14, 1888) the sum due is named at $194.25. The day following (December 15, 1888) the note provides there shall be paid $19.42 more. There are no equivocal or doubtful promises made. There is no more doubt or uncertainty as to the amount to be paid the day after due, than if the note simply provided for interest from maturity. In either event the promise is to pay an additional sum if not paid at maturity. The only difference is as to the sum to be added. The case last cited (122 Mass. 73) is one where the note bore a certain rate of interest to maturity with a higher rate thereafter, and it was there said: “The instrument sued on is the promise to pay a definite sum of money at a specified time, and as it is payable to order and and indorsed by the payee, must be considered a negotiable promissory note, unless this character is altered *635by that which follows the promise. An additional rate of interest is provided for if the note shall not be met at maturity, but, as the sum to be paid is still definite and payable absolutely, this cannot affect the negotiability.”

While I am free to admit that in Kansas the courts have not been so exacting and rigorous as to negotiable promissory notes as have the courts of this state, yet the decision in Parker v. Pleymell, 23 Kan. 402, is quite persuasive here. In that case the promise was to pay interest at twelve per cent, after maturity, and after that promise were these words : “If this note is not paid at maturity, the same shall bear twelve-per-cent, interest from date.”- Judge Brewer, delivering the opinion of the court, says : ‘ ‘ Clearly these words do not destroy the negotiability of the paper. They do not leave uncertain either the fact, the time or the amount of payment. Indeed, up to and including the maturity of the note’, they are entirely without force. They become operative only after the note is dishonored and has-ceased to be negotiable, and then there is no uncertainty in the manner or extent of their operation. They create, as it were, a penalty for non-payment at maturity, and a penalty the amount of which is definite, certain and fixed.”

The instrument we have here is quite different from those condemned in the Missouri decisions, cited and relied upon by defendant’s counsel. The element of uncertainty, there mentioned, grows out of an undertaking, in the body of the note, to pay an additional sum as “attorney’s fees for collection,” or “fees for collection,” etc., as will appear by inspection of the cases: 63 Mo. 35; 64 Mo. 477; 71 Mo. 618; 73 Mo. 35; 83 Mo. 633. The promise contained in the instruments under review in these several cases was to pay an uncertain sum in addition to the principal amount. It could not be said whether or not an attorney would be employed, nor what would be a reasonable fee for collection. The reasoning of the courts in this class of cases is set out *636in. Woods v. North, 84 Pa. St. 409 (an authority cited by defendant and approved by our supreme court). The court there, by Si-iakshwood, J., declares that the provision for attorney’s fees for collection injects an element of uncertainty in the promise. “It is a mistake,” he says, “to suppose that if the note was unpaid at maturity, the five per cent. (there named as the fees for collection ) would be payable to the holder by the parties. It must go into the hands of an attorney for collection. It is not a sum necessarily payable. The phrase ‘collection fee’ necessarily implies this,” etc. In the case at bar no such matter of uncertainty appears. By an examination of the terms of the note, it can be definitely and absolutely determined just the amount called for by the instrument on any particular day. It matters not that, the day before its maturity, it could 'not be said whether or not the maker Watson would pay promptly on due day, and save the ten-per-cent, penalty or damage for non-payment. This may be said of a note promising interest from maturity, or for one rate of interest to due day with an increase of interest thereafter, yet because of the uncertainty as to whether or not the maker of such an instrument would pay at maturity, and thereby avoid paying- any interest in the one case, or avoid the increase in the other, it cannot be said that such notes would be non-negotiable on that account.

Again, take the matter of an accepted bill of exchange. Our statute provides ( R. S. 1889, sec. 726 ) for certain damages for non-payment by the acceptor. In some cases the holder of the bill of exchange is entitled to recover four per cent., in others ten per cent., and in others even twenty per cent., as damages for non-payment. And now will it be said that, because it may be uncertain whether or not the acceptor of a bill of exchange will pay at the time agreed upon by the acceptance, and thereby save the damages, the bill of *637exchange is, for that reason, robbed of its character as a negotiable instrument ?

For the reasons, then, hereinbefore indicated, I am of the opinion that the instrument here in question is a negotiable promissory note, and that the judgment of the lower court should be affirmed. Judge Smith concurs in a separate opinion. The judgment, therefore, of the circuit court is affirmed.