be sold in a specified manner.78 But it has been held a note containing an agreement that if there shall be any depreciation prior to the maturity of the note, in the collateral security, the payee or holder may call for such further security as he deems satisfactory, is not a negotiable promissory note.79 A note otherwise negotiable is not rendered nonnegotiable by a stipulation contained therein, retaining legal title to the property for which it was given, as security for its payment.80 This proposition is not without opposition; it has been held that an agreement to pay a sum certain as the purchase price of property sold, with an option on the part of the payee to take possession of the property in case of default in payment, lacks that degree of certainty which is essential for a negotiable promissory note.81 78. Knipper v. Chase, 7 Iowa, 145; Bank of Carroll v. Taylor, 67 Iowa, 572, 25 N. W. 810; Mumford v. Tolman, 54 Ill. App. 471; Biegler v. Merch. Loan & Trust Co., 62 Ill. App. 560; Duncan v. City of Louisville, 13 Bush (Ky.), 378, 26 Am. Rep. 201; Collins v. Bradbury, 64 Me. 37; Towne v. Rice, 122 Mass. 67; Blumenthal v. Jassoy, 29 Minn. 177, 12 N. W. 517; Cox v. Cayan, 117 Mich. 599, 76 N. W. 96; Goss v. Emerson, 23 N. H. 38; Ilsley v. Smedes, 15 Daly (N. Y.), 488, 8 N. Y. Supp. 470; Valley Nat. Bank v. Crowell, 148 Pa. St. 284, 23 Atl. 1068, 33 Am. St. Rep. 824; Farmers' Bank of Mercersburg v. Crowell, Idem.; Craft v. Bunster, 9 Wis. 503. 79. Lincoln Nat. Bank v. Perry, 66 Fed. 887, 14 C. C. A. 273, 32 U. S. App. 15. In the case of Continental Nat. Bank v. Wells, 73 Wis. 332, 41 N. W. 409, it was held that a note for a specified sum due at a certain time is rendered nonnegotiable by an alternative contract therein, that the payee. may sell the collateral securities mentioned therein, and, if those decline in value, he may sell them before the note would otherwise be due, in which case the proceeds of sale, less its expenses, shall be applied on the debt, and, if a deficiency remain, it shall be due forthwith. 80. Provision as to retention of title of consideration of note.- See the following cases: Mott v. Havana Nat. Bank, 22 Hun (N. Y.), 354; First Nat. Bank v. Slaughter, 98 Ala. 602, 14 South. 545, 39 Am. St. Rep. 88; Howard v. Simpkins, 69 Ga. 773; Chicago Ry. Equipment Co. V. Merchants' Nat. Bank, 136 U. S. 268, 10 Sup. Ct. 999, 34 L. Ed. 349; Heard v. Dubuque Co. Bank, 8 Neb. 10, 30 Am. Rep. 811; Kimball County v. Mellon, 80 Wis. 133, 48 N. W. 1100. In the case of Third Nat. Bank v. Bowman-Spring 50 App. Div. 66, 64 N. Y. Supp. 410, the claim was made by the defendant that a note was not negotiable because of the matter following the ordinary form of a promissory note, viz.: The waiver of protest; the agreement that the title of the property for which the note was given should remain in the payees until the note was fully paid; the statement that no person was authorized to receive payment of the note, unless duly indorsed at the time, and that no it was presented and the amount paid time for payment or to renew the note. agent was authorized to extend the After citing Arnold v. Rock River Valley Union R. Co., 5 Duer (N. Y.), 207; Mott v. Havana Nat. Bank, 22 Hun (N. Y.), 354; Hodges v. Schuler, 22 N. Y. 114; Frank v. Wessels, 64 N. Y. 155, the court said: "We are aware of no authorities in this State in conflict with those here referred to, and they hold that where a note contains a promise to pay a certain sum of money, at a certain time absolutely, the addition of provisions similar to those in the note in suit does not render the note nonnegotiable." 81. Nonnegotiability of such instruments.- In the case of Wright v. c. Provision authorizing confession of judgment. The rule, as declared in the Negotiable Instruments Law, that the negotiable character of an instrument, otherwise negotiable, is not affected by a provision which authorizes a confession of judgment if the instrument is not paid at maturity, is new to the State of New York and many of the Eastern States. The custom of inserting such a provision in negotiable instruments has apparently never been considered by the courts of those States. It has been held in the State of Pennsylvania that a note payable to bearer authorizing any attorney to enter a judgment in favor of the holder for the amount of the note with costs, coupled with a release of errors and a waiver of stay of execution, and of the right of an inquisition and an appraisement is not a negotiable note.82 But in many of the Western States the rule is different, and it would seem that a provision for the confession of judgment is quite often inserted and has been generally accepted as not affecting the negotiability of the instrument. It is uniformly held that a power of attorney 83 is uncertain and capable of two constructions as to its terms. The court erred in calling it a promissory note." See also Bannister v. Rouse, 44 Mich. 428, 6 N. W. 879; Nat. Bank of Syracuse v. Armstrong, 25 Minn. 530; Wright v. Shimek, 8 Kan. App. 350, 55 Pac. 464; Jones v. Dulick, 8 Kan. App. 855, 55 Pac. 522. 82. Overton v. Tyler, 3 Barr (Pa.), 346; Sweeney v. Thickstun, 77 Pa. St. 131. And in other States see Richards v. Barlow, 140 Mass. 216, 6 N. E. 68; Brewing Co. v. McKittrick, 86 Mich. 191, 48 N. W. 1086; Law v. Crawford, 67 Mo. App. 150. Traver, 73 Mich. 493, 41 N. W. 517, should lose the property, and also 3 L. R. A. 50, a promissory note speci- have the payment of the whole sum fied the property for the purchase enforced against him. The instrument price of which the note was given, and contained the sentence: "The conditions of this note are, if not paid when due, the property for which it is given shall be the property of A. J. Mowry." The court said: "The instrument before us has more the appearance of a contract of sale, with the title reserved in the property to the seller until paid for, than it has of a promissory note. The naming of the property for which it was given, standing alone does not hurt it as a promissory note. But coupled with the clause, The conditions of this note are,' etc., it has the effect to render the instrument a contract, and 83. Osborn v. Hawley, 19 Ohio, 130; not a promissory note. No one can Clements v. Hull, 35 Ohio St. 141; tell from the reading of this instru- Spence v. Emerine, 46 Ohio St. 433, ment whether the payment therein 15 Am. St. Rep. 634; Nickerson v. mentioned is certain and uncondi- Sheldon, 33 Ill. 372; Gehlbach v. Nat. tional or not. This condition seems Bank, 83 Ill. App. 129; Tolman v. Janto provide, as before said, an option son, 106 Iowa, 455, 76 N. W. 732; Gilin the purchaser. It may be said that more v. Hirst, 56 Kan. 626, 44 Pac. this could not have been the intent of 605. In the case last cited it was held the parties to the instrument, that the purchaser should have the use of the property for one year free of charge; but it may also be said, on the other hand, that the maker could not have intended that, if he failed to pay on or before the day therein named, he that an agreement added to a promissory note authorizing the legal holder to have judgment by confession at any time thereafter, for the stipulated damages and attorney fees, does not render the amount the maker must pay so uncertain as to destroy the ne 84 to confess judgment must be strictly construed, and whether the power can be executed for the benefit of a holder of a note other than the payee must depend upon the language of the power itself.85 If the note is in itself perfect, without conditions, it may remain negotiable, although the power of attorney to confess judgment may not, by its terms, operate in favor of an indorsee or transferee of the note.Se d. Waiver of benefits of a law intended for protection of obligor. -It has been generally held in those jurisdictions where the subject has been before the courts for consideration, that a provision in a negotiable instrument waiving the benefit of exemption, homestead, and valuation and appraisement laws does not impair the negotiable character of the instrument.87 The fact that a note, otherwise negotiable, contains a provision for the payment of attorney's fees, and waives all exemptions, and stipulates that the gotiability of the note, but simply time after the same became due; but gives the holder an additional remedy the court questioned whether such a to enforce the payment, and a remedy warrant of attorney would be legally which facilitates rather than incum- operative to authorize the confession bers its circulation. of a judgment in favor of an indorsee of such note. And in Cushman v. Welsh, 19 Ohio St. 536, the power was conferred by the terms of the instrument to confess judgment only in favor of the legal holder of the note," and it was decided that a warrant of attorney for the confession of such a judgment did not authorize a confession of judgment on such a note in favor of the owner or holder thereof, without an indorsement thereon by the payee, as provided by the statute, transferring the legal title to such owner and holder of the note. 84. Cushman v. Welsh, 19 Ohio St. 536; Manufacturers & Mechanics' Bank v. St. John, 5 Hill (N. Y.), 497. 85. In whose favor confession may be made. In the case of Spence v. Emerine, 46 Ohio St. 433, 21 N. E. 866, 15 Am. St. Rep. 634, the note contained the following provision: "And We jointly and severally hereby authorize any attorney-at-law, at any time after the above sum becomes due, with or without process, to appear for us in any court of record in the State of Ohio and confess judgment against us for the amount due In Clements v. Hull, 35 Ohio St. 141, thereon, with interest and costs, and the authority given by the power of to release all errors and the right of attorney was "to confess judgment appeal;" it was held that this power in favor of the holder of said note." of confession of judgment could not There it was held that the confession operate in favor of a holder to whom of judgment might be executed in favor the payee transferred it by delivery of an equitable owner and holder to although the note was made payable to a definite person or bearer. This is on the principle that in all cases of special agency an agent constituted for a particular purpose, and under a limited power, cannot bind his principal if he exceeds that power. In Marsden v. Soper, 11 Ohio St. 503, the warrant of attorney under which judgment was confessed purported to authorize such confession "in favor of any holders of this obligation" at any whom a note payable to a designated payee had been transferred by delivery, without indorsement. 86. Osborn v. Hawley, 19 Ohio, 130. 87. A note is not rendered nonnegotiable by the addition of the following stipulation, viz.: "We do hereby relinquish and waive the benefit of all laws exempting real and personal property from levy and sale." Hughitt v. Johnson, 28 Fed. 865; Lyon v. Martin, 31 Kan. 411. 89 property for which it was given shall remain as security for the debt, does not destroy its negotiability.88 In a Pennsylvania case, it was urged that the words in a promissory note, "waiving the right of appeal, and of all valuation, appraisements, stay, and exemption laws," destroy its negotiability. The court said: "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." e. Option with holder requiring something in lieu of money.The rule that the negotiability of an instrument is not affected by a provision giving the holder an election to require something to be done in lieu of payment of money is well established, independent of the provisions of the Negotiable Instruments Law. As we have already observed, if there appears upon the face of the instrument any contingency which would make it payable in anything other than money, it loses its negotiable quality; but where the debtor promises to pay in money, and he has no election to do anything else, but the choice is left with the holder as to receiving something other than money, the negotiable quality of the instrument is not affected.91 88. First Nat. Bank v. Slaughter, 98 Ala. 602, 14 South. 545, 39 Am. St. Rep. 88. 89. Zimmerman v. Anderson, 67 Pa. St. 521, 5 Am. Rep. 447. In this case the action was upon the following note: "$125.00. "TOWNSHIP OF BUFFALO, March 25, 1868. Six months after date I promise to pay E. 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 90 of stock in exchange therefor, has been held to be a negotiable promissory note on the ground that the option was with the holder. Hodges v. Shuler, 22 N. Y. 114. So an instrument in the following form: "Four months after date, I promise to pay to the order of M. goods on demand) value received," has fifty-five dollars, at my store (or in The court lays down the rule, that if been held a negotiable promissory note. there appears upon the face of the make it payable in anything other note any contingency which would than the money, then it loses its negotiable quality, but where the debtor promises to pay in money and he has no election to do anything else, but the choice is left with the holder as 90. See § 37 (e), ante. to receiving something other than 91. In New York, an instrument by money, the negotiable quality of the which a railroad corporation promises instrument is not affected. Hosstatter to pay a certain sum, or upon the sur- v. Wilson, 36 Barb. (N. Y.) 307. render of the instrument, together In the case of Dinsmore v. Duncan, with the interest warrants not due, to 57 N. Y. 573, a note issued by the the treasurer, to issue certain shares United States contained a statement, laws. Indorsed: "MOSES ANDERSON." € 42. Omissions not affecting validity and negotiability. a. Statutory provision.- The Negotiable Instruments Law provides that: "The validity and negotiability of an instrument "are not affected by the fact that: "1. It is not dated; or 2. It does not specify the value given; or that any value has "been given therefor; or "3. It does not specify the place where it is drawn or the place "where it is payable." "2 92 94 b. Necessity of date. Since the date of an instrument generally regulates the time when it becomes due, it should be clearly expressed.93 A date, however, has never been deemed essential to the validity of a negotiable instrument, for where such an instrument has no date, the time, if necessary to be inquired into, will be computed from the date it was made and issued." The date of a negotiable instrument is merely prima facie evidence of the time of its inception. It has no real inception until it is delivered, and for all legal purposes it is to be considered as made on the day it is delivered. So where an instrument is not dated the time when it is due should be computed from the time of its delivery. The written date on a negotiable instrument is only presumptive evidence of the actual time of its execution.97 It has 96 viz.: "At maturity convertible, at the option of the holder, into bonds redeemable, at the pleasure of the government at any time after five years and payable twenty years from July 15, 1868, with interest at 6 per centum per annum, payable semi-annually in coin." It was objected that the note was in the alternative, and that, accordingly, it did not fall within the definition of a negotiable instrument. The court said: "But in these cases (Atkinson v. Manks, 1 Cow. [N. Y.] 691; Cook v. Satterlee, 6 Cow. [N. Y.] 108; Matthews v. Houghton, 2 Fairf. [Me.] 377) the alternative was with the debtor, so that it could not be said that the instrument was payable absolutely and at all events. No case was cited, nor is it believed can any be found, in which where the note is payable absolutely, as far as the debtor is concerned, and the creditor has an option to convert the obligation of the debtor into another and different one, it is held to be not negotiable, so long as the creditor has not exercised his option." 92. Neg. Inst. L. (N. Y.), § 25. For the same section in the statutes of other States see Appendix. 93. Chitty on Bills, p. 148; Story on Promissory Notes, § 45. 94. Alabama.- Burns v. Moore, 76 California.-Collins v. Driscoll, 69 Illinois. Archer v. Claflin, 31 Ill. Indiana.- Seldonridge v. Connable, 32 Ind. 375. New Jersey.- Vander Vere v. Odgburn, 2 N. J. L. 63. New York Mechanics & Farmers' Vermont.- Michigan Ins. Co. V. 95. Giles v. Bourne, 6 Mau. & Sel. 96. Cowing v. Altman, 71 N. Y. 435. 97. Germania Bank v. Distler, 67 Barb. (N. Y.) 333, 4 Hun (N. Y.), 633, affd. in 64 N. Y. 642; Breck v. |