« AnteriorContinuar »
thority arising from possession of the note with unfilled blanks was rebutted (12).
$ 54. Innocent purchaser of instrument completed in excess of authority. Suppose, however, that the plaintiff had purchased the notes from the brother, after he had, in breach of his authority, filled the blanks; and that the plaintiff had no knowledge that the note was not complete when signed by defendant. In such a case the plaintiff could recover (13). The violation of his authority by the defendant's agent would be no reason for defeating a purchaser in good faith of the completed note. The N. I. L. (14) states the rule as follows:
“But if any such instrument, after completion, is negotiated to a holder in due course, it is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given and within a reasonable time.”
$ 55. Incomplete instruments not intentionally delivered as such. Up to this point, we have been dealing with blank pieces of paper and incomplete notes and bills, which have been signed and delivered by the signers “in order that the paper may be converted into a negotiable instrument.” If the signer of a blank sheet of paper intended it for some other purpose, or if the signer of an incomplete note never intrusted any one with the paper for that purpose, the signer is not chargeable upon the paper,
(12) See also, to the same effect, Boston Steel Co. v. Steuer, 183 Mass. 140.
(13) Putnam v. Sullivan, 4 Mass. 45. (14) Sec. 14.
even though after its completion it was transferred to an innocent purchaser. In Caulkins v. Whistler (15), the defendant was employed by Smith as agent to sell farm machinery. At Smith's request defendant signed his name upon a blank piece of paper, which Smith was to send to the manufacturers of the machinery, so that they might know defendant's signature upon the orders he sent in. The note upon which the action was brought was printed over defendant's signature. The defendant was not liable. In another case, the defendant wrote his signature as acceptor on several printed blank forms for bills of exchange, and left them in a drawer of his desk. The blanks were stolen, filled up, and negotiated to the plaintiff, an innocent purchaser. It was held the plaintiff could not recover (16). The N. I. L. (17) thus codifies the result of these cases:
“Where an incomplete instrument has not been delivered, it will not, if completed and negotiated without authority, be a valid contract in the hands of any holder."
$ 56. Presumption of delivery. That a negotiable instrument has not had a valid inception is a fact which must be proved in the first instance by the defendant who is sued upon it. In other words, from the mere production in court by the plaintiff of a completed instrument signed by the defendant, it is inferred, as a matter of fact, that the instrument produced is the obligation of the signer.
(15) 29 Ia. 495.
“Where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed until the contrary is proved” (18).
SECTION 2. CONSIDERATION.
$ 57. What a consideration is. A simple promise is unenforceable in law. If A, intending to benefit B, promises to pay him $100, B can not compel A to pay. But if a consideration moved from B to A for the promise, there would be a valid contract and A's promise would be binding. A consideration is a surrender of a legal right or a promise to surrender a legal right. Thus, if B had paid A $100, or delivered property to him, or turned hand springs for A's amusement, or had promised to do any of those acts in exchange for A's promise to pay $100, B could hold A to the performance of his promise. The doctrine of consideration is discussed at length in Contracts, $$ 40-61, in Volume II of this work.
$ 58. Consideration necessary for negotiable instrument. The doctrine of consideration was of pure common law origin, and it is probable that originally it had no place in the law of bills and notes, which has its roots in the law merchant. Thus, if A made a promissory note payable to B, and delivered it to the payee as a gift, it was once held that B could enforce the note (19). But the common law courts, failing to distinguish between common law contract obligations and bills and notes, have at
(18) Neg. Inst. Law, sec. 16.
tempted to apply the doctrine of consideration to negotiable instruments. Forced constructions of simple business transactions, and arbitrary distinctions have been the result. Nevertheless the N. I. L. enacts (20) that "absence
of consideration is a matter of defence.” result, in the case supposed of the gift by A of his note to B, the absence of consideration would be a defence to A (21). Again, if B, the payee of a note for which he had given a consideration to the maker, indorsed the note to C as a gift, C could not enforce B's contract as indorser against him, because no consideration was given by C (22).
$ 59. Pre-existing debt as consideration. The N. I. L. declares (23) that “any consideration sufficient to support a simple contract" may be consideration for a negotiable instrument. We are thus thrown back upon our common law definition of consideration, as a surrender of a legal right, or a promise to surrender a legal right.
If A owes B $100 and B accepts, in satisfaction and discharge of the debt, A's note for that amount, the surrender by B of the old debt in exchange for the note is the surrender of a legal right and a consideration for the note (24). For the same reason, if B had accepted X's note in payment of A's debt to B, the surrender by B of A's debt would be a consideration for X's note (25). In both of these cases B's original claim against A has been absolutely discharged, and his only rights are upon the
(20) (21) (22) (23) (24) (25)
instrument. Thus, in the second case B could look to X only for payment. It is held, however, that unless the parties expressly agree that the note shall extinguish the debt for which it was given, it does not have that effect, and that, if the note is not paid, B, the creditor, may sue A on the original debt (26). If then, B accepts X's note on account of, but not in discharge of, a debt due from A, is there any consideration for the instrument? What legal right has B surrendered or promised to surrender? In such a case it is held that from B’s acceptance of the note on account of the debt is “implied" a promise on his part not to sue A until after the note becomes payable. Thus, if the note were payable three months after date, B's “implied” promise not to sue A on the debt for three months is said to be the consideration of the note (27). The same result is attained by the same reasoning, where B accepts A's, the debtor's, own note, payable after date, on account of A's debt (28). It is true in these cases that B, after accepting the note for the debt, can not sue A until the note has become due. But the reason for this is not that B has impliedly promised not to sue, but the rule of law that the acceptance of a negotiable instrument for a debt is conditional payment and ipso facto suspends the debt (29).
$ 60. Same (continued). Suppose, however, the bill or note taken on account of the debt is payable on demand. In such a case the note would be due at once, and, if not
(26) Ward v. Evans, 2 Ld. Raymond, 928.
(29) Ward v. Evans, 2 Ld. Raymond, 928; Martens-Turner Co. v. Mackintosh, 17 N. Y. App. Div. 419.