MERCHANTS' NAT. BANK V. CHICAGO RAILWAY EQUIPMENT 00.
that he had at last succeeded in chartering a vessel, and had bought 12,000 bushels of white corn at 51 cents, free on board, and had ar· ranged to ship it at 7 cents freight,-nothing, except that on the 4th he telegraphed Phillips that he had received his telegram of that day, and would await his letter of same day as to particulars. Certainl! there was no renewal of the order given in his letter of March 14th in the non-committal telegram of the fourth April. I am clear that inasmuch as the letter of the fourteenth March was not accepted or complied with "on its receipt," and became nugatory, there was no revival or renewal of it in Burmester's letter of the twenty-third March, much less in his telegram of the fourth April. I am clear that the telegram and letter of Phillips, sent on the fourth April was, in the eye of the law, a new proposal, which, in order to bind Phillips, must have been promptly accepted by Burmester. Instead of accepting it promptly, Burmester seemed to be cautious not to do so. In the whole correspondence there was no meeting of the minds of the parties. There was but one opportunity in which it was practicable that there should be. This was on the fourth April, when Phillips informed Burmester that he was now ready to comply in every particular with the conditions which Burmester had imposed, and insisted continually upon, from the beginning. Burmester did not accept this new proposal. He delayed a week, and lost the contract. The motion for a new trial is overruled.
MERCHANTS' NAT. BANK OF CHICAGO V. CHIOAGO RAILWAY EQUIPl\rENT Co.
NEGOTIABLE INSTRUMENTS PAY A PART.
TO BECOME DUE ON FAILURE TO
An instrument in writing in the form of an ordinary promissory note, payable on a day certain, but containing a clause reciting that the instrument is one of a series of notes, and providing that "each and all shall become dUl; and payable to the holder on the failure of the maker to pay the principal or interest of anyone of the notes of said series," and also reciting that the consideration of said notes was certain railway freight cars manufactured and sold by the payee to the maker. anll providing "that the title of said cars shall reo main in the payee until all the notes of said series, both principal and inter est, are fully paid, .. held to be a negotiable instrument.
At Law. Gregory 0; Gregory, for plaintiff. I. C. Sloan, S. U. Pinney, and Judge Clark, for defendant. BUNN, J. This action is brought upon two instruments in writing for the payment of $5,000 each, and declared upon as negobiable promissory notes. A copy of one of the notes is as follows:
"$5,000.00. CmCAGO, ILL., January 20, A. D. 1884. "For value received, four months after date the Chicago Railway Equipment Company promise to pay to the order of the Northwestern Manufacturing & Car Company, of Stillwater, Minnesota, five thousand dollars, at First National Bank of Chicago, Illinois, with interest thereon at the rate of - per cent. per annum from date until paid. "This note is one of a series of twenty-five notes of even date herewith, of the sum of five thousand dollars each, and shall become due and payable to the holder on the failure of the maker to pay the principal or interest of anyone of the notes of said series; and all of said notes are given for the purchase price of two hundred and fifty railway freight cars, manufactured by the payee hereof, and sold by said payee to the maker hereof, which cars are numbered from 13,000 to 13,249, inclusive, and marked on the side thereof with the words and letters' Blue Line C. & E. I. R. R. Co.;' and it is agreed by the maker hereof that the title to said cars shall remain in the said payee until all the notes of said series, both principal and interest, are fully paid, all of said notes being equally and ratably secured on said cars. "GEO. B. BUUROWS, Vice-President. "E. D. BUFFINGTON, Treas. "No.1. H. R. M."
Indorsed on back:
" Northwestern Mfg. & Car Co. "Per J. C. O'GORMAN, Treas."
Indorsed on face :
"FIRST NATIONAL BANK OF CHICAGO. "Returned. No account."
The other note is the same in all respects except that the date is January 23d instead of January 20th. The plaintiff having proved the execution of the said instruments by the defendant, and their indorsement to the plaintiff, and having introduced evidence showing that it purchased the same in the usual course of business before due, paying full value therefor in cash, without any notice of want or failure of consideration, rested its case; and the defendant now moves that a verdict be directed by the court for the defendant on the ground that the instruments so declared upon as promissory notes are not such, but are executory contracts, mere choses in action, not negotiable by the law-merchant, in this: First, that the time of payment is uncertain, being made to depend in part upon the question whether other instrument or instruments in writing of the same series shall fall due and remain unpaid before the maturity of those suedu pon; second, that the promise to pay is not absolute or unconditional, but depends upon the performance or readiness of performance on the part of the payee of the stipulation
llERCHANTS' NAT. BANK tI. CHICAGO RAILWAY EQUIPMENT CO.
contained in the instrument in regard to the sale of the cars, and the title thereof being held by the payee until payment of the entire series of such instruments in writing is made. I am of opinion that neither of these contentiolls have been made good. On the contrary, it seems to me that these instruments answer all the usual conditions of negotiable promissory notes, in beiug absolute and unconditional promises in writing to pay a certain sum of money to a particnlar person at a time fixed. The time fixed in each note is four months after date, and the circumstance that they are made liable to fall due at an earlier date, in the event of the default in the maker to pay the principal or interest of anyone of the notes of the series, does not affect the negotiable character of the papir. Nothing is more common, when a series of notes is given constituting part and parcel of the same security or transaction, to make them payable in successive installments at different times, and to provide in each that upon default in the payment of either principal or interest of any, the whole sum shall fall due. In such cases a time certain is fixed for paymeut, which answers this condition of commercial law applicable to negotiable paper; and the fact that the instrnment may become due at an earlier day, through the default of the maker in not paying principal or interest, cannot destroy the negotiable quality of paper intended to circulate as such. It is well known that a large proportion of the real-estate notes given with mortgage security throughollt the west are drawn in this manner. These notes go into the hands of different persous, and take with them, as an incident, a corresponding interest in the security. Upon the other point, that the instrument contains a provision which makes it a more executory contract, upon which the plaintiff cannot recover until he shows performance or an offer to perform, it seems to me that this contention is equally untenable. The construction I should place upon that provision in the notes, taken as a. whole, is that it is a recital of the consideration for which the note was given, and of the fact that the payee was to retain a lien by wa.y of mortgage upon the property sold as security for the payment of the notes, and this apparently for the purpose of giving the notes which were intended to be put upon the market a more ready acceptance and circulation, and a better market value. The inference that anyone contemplating a purchase of the note would naturally and properly draw. would, I think, be that the freight cars had already been sold by the payee to the maker, and that the payee was to retain a lien and security upon them in the way of a mortgage for the payment of the purcha,se price, which should inure equally and ratably to all the holders of the notes according to their several amounts. without regard to the time when such notes should fall due. If this be so, then the contract was an executed one, the consideration for the notes had already passed, and the payment of the notes would not be made to depend upon any condition whatsoever.
And this I believe to be the proper construction to be placed upon the instrument. There is no doubt considerable conflict in the decisions upon similar questions, and, this being the case, the court feels somewhat free to decide the question upon what it conceives to be the correct legal principles applicable to such cases; and in so doing I shall entertain a hope that the ruling may be found to be grounded upon true principles of commercial law, and also to be in accordance with the best authority. The motion to direct a verdict for the defendant will be overruled. The defendant thereupon offered evidence to prove a want of con· sideration in the making of the note, which evidence being objected to was ruled out, until the plaintiff's position as a bona fide purchaser and owner of the notes should be impeached. Thereupon the defendant rested its case, and the court ordered a verdict for the plaintiff for the amount of the notes in suit, with interest.
and another v.
«(}ircuit (lourt, D. Kansas.
December 16, 1885.)
CoRPORATIONS-ACTS ULTRA VIRES-ExECUTED CONTRACTS.
Where a corporation goes outside of the scope of its legitimate business and makes a contract, and that contract has been executed and the corporation has received the benefits thereof, it will be enforced.
2. S.um-CONTRACTS WITHIN SCOPE OF BUSINESS. Where the contract is within the general scope of the business of corporations of the character, though beyond the powers actually vested in the particular corporation contracting, parties who make the contract in ignorance of the peculiar limitations in the special corporate powers of this individual corporation are not prejudiced thereby. 3. SAME-INJURY TO INNOCENT PARTIES. Wherever a contract has been entered into which is beyond the powers of the corporation, and other parties have acted upon the faith of that contract and parted with money or value, and the relations of the parties have become so changed that the ante the contract cannot be restored, the contract will be enforced. 4. BANKING CORPORATION-SUBSCRIPTION TO A CREAMERy-WITIIDRAWAL. Where a banking corporation, through its president, subscribed to a creamery, but before any act was done or expenditures made on the faith of such subscription the SUbscription was withdrawn, held, that it was simply an execu' tory contract, and that the subscription could at the time be withdrawn, and that the bank was not liable. . 5. PRINCIPAL AND AGENT-CONTRACT FOR PRINCIPAL BY AGENT-LIABILITY OF
Where an agent, without fraud or misrepresentation, at the request of the principal makes a contract for such principal and in his name, whiC(h is not binding on the principal because ultra vires, the facts being fully known to all parties, the agent is not liable on such contract.