which converts his letter into a negotiable instrument. Sometimes documents of considerable length are made use of in connection with some business transaction which at first sight appear to be simple contracts but there may be contained therein. the necessary language to make the instrument negotiable.

What, then, is the definition of a negotiable instrument? To put the question in other words: What language must appear on the instrument if it is to have the characteristics of negotiability? What language must not be inserted in the instrument? What language may be incorporated therein without affecting negotiability? The answers to these questions will not be taken up in just this order, but the sections of the Negotiable Instruments Law and the cases following may be looked at from these three points of view. The specific requirements of negotiability represent attempts to carry out into details the broad requisite of certainty.

SECTION 2.—WRITING AND SIGNATURE

The Negotiable Instruments Law provides:

Section 1, subsec. 1. That an instrument to be negotiable must be in writing and signed by the maker or drawer.

Section 132. The acceptance must be in writing and signed by the drawee.

Obviously there must be such a requirement as that here specified. May the writing be in pencil, or by rubber stamp? It has been held that such is a writing. What is a signature? The signing of one's name, yes. But what is his name? Suppose a man by the name of John Smith signs a note with the name George Edwards. May John Smith be sued? Yes, because, for the purpose of this instrument, his signature is that of George Edwards. Suppose John Smith signs, in the space provided for the signature, the number 123; is John Smith bound? Other cases may be presented, but such questions rarely arise. Does the word "signature" carry with it the requirement that it shall appear in any particular place, such as the lower right-hand corner? If he signs his name at the top, or on the back, has he signed the instrument?

SECTION 3.-NECESSITY FOR A PROMISE OR ORDER N. I. L., Section 1, subsec. 2. An instrument to be negotiable must contain * * a promise or order.

*

What is a promise? What is an order? A debtor hands to his creditor a paper bearing his signature on which is written "I owe you, A. B., $100." Is this a promise? No; because the debtor has simply acknowledged that he owes a debt but he has not promised to pay it. Suppose the instrument read: "I owe you, A. B., $100, due on demand." Is this a promise? The debtor has not

used the word "promise;" but has he not used language the equivalent of the word "promise"? Probably so, because the words "due on demand" carry with them by implication the meaning that if the creditor does demand, the debtor will pay; therefore, the debtor has promised. What is the principle involved? Suppose an instrument contains these words: "Please let the bearer have $100." Is this an order? Hardly; it is more like a request for a loan of money. "Please pay A. $100." Is this an order? Yes; because the word "pay" is imperative and it is an order although modified by the use of respectful language.

SECTION 4.-THE PROMISE OR ORDER MUST BE
UNCONDITIONAL

We come now to one of the most important and at the same time one of the troublesome questions connected with our study of formal requirements of negotiable instruments. When is a promise or order unconditional? Before the enactment of the Negotiable Instruments Law, the courts were confronted with this question with considerable frequency. The Negotiable Instruments Law attempted a definition, and it will be our purpose in the cases I which follow to discover what promises have been held to be conditional and what promises are regarded by the courts as unconditional. The sections of the Negotiable Instruments Law bearing on this question are as follows:

Section 1, subsec. 2. An instrument to be negotiable must contain an unconditional promise or order to pay a sum certain in money.

Section 3. An unqualified order or promise to pay is unconditional within the meaning of this Act though coupled with: (1) An indication of a particular fund out of which reimbursement is to be made, or a particular account to be debited with the amount; or (2) a statement of the transaction which gives rise to the instrument. But an order or promise to pay out of a particular fund is not unconditional.

It will be noticed that Section 3 does not lay down rules separate and distinct from the rule of Section 1, subsection 2. Section 3 merely defines more particularly what constitutes a conditional promise or order under certain circumstances.

FIRST NAT. BANK v. LIGHTNER.

(Supreme Court of Kansas, 1906. 74 Kan. 736, 88 Pac. 59, 8 L. R. A. [N. S.] 231, 118 Am. St. Rep. 353, 11 Ann. Ças. 596.)

The First National Bank of Hutchinson brought this action against George W. Lightner on a check and an order, of which the latter reads as follows:

"Hutchinson, Kansas, Aug. 10, 1903.

"G. W. Lightner, Offerle, Kansas-Dear Sir: Pay to the order of the First National Bank of Hutchinson, Kansas, on account of contract between you and the Snyder Planing Mill Co. $1,500. "The Snyder Planing Mill Co.,

"Accepted. G. W. Lightner."

"Per J. F. Donnell, Treas.

Defendant contended that said orders were nonnegotiable, and were subject to the same defenses in the hands of the First National Bank of Hutchinson, Kan., as if they had remained in the hands of the Snyder Planing Mill Company.

* * *

PORTER, J. The main controversy is whether the orders given by the planing mill company to the bank, and accepted by defendant, are negotiable instruments. Each of them, therefore, possesses all the essential elements of a bill of exchange unless the words quoted make them payable out of a particular fund and conditionally so that the acceptance is thereby qualified. The law is well settled that a bill or note is not negotiable if made payable out of a particular fund. * * But a distinction is recognized where the instrument is simply chargeable to a particular account. In such a case it is beyond question negotiable; payment is not made to depend upon the sufficiency of the fund mentioned, and it is mentioned only for the purpose of informing the drawee as to his means of reimbursement. * * *

The test in every case is said to be: "Does the instrument carry the general personal credit of the drawer or maker, or only the credit of a particular fund?" * * * A promise to pay a certain sum "out of my next quarter's mail pay, which becomes due January 1, 1883," was held in Nichols v. Ruggles, 76 Me. 25, to be an absolute promise to pay a certain sum of money. In Haussoullier v. Hartsinck, 7 T. R. (Durnford & East), 733, it was held that an instrument promising to pay a certain sum "being a portion of a value, as under deposit in security for the payment hereof," was a promissory note payable at all events. In Pierson v. Dunlop, 2 Cowp. 571, an order which was to be charged "to freight" was held negotiable. A note expressed to be in payment of certain tracts of land was held negotiable. Bank v. Michael, 96 N. C. 53, 1 S. E. 855. Likewise a note which stated that it was given in consideration of certain personal property, the title of which was not to pass unless the note was paid. Chicago Railway Co. v. Merchants' Bank, 136 U. S. 268, 10 Sup. Ct. 999, 34 L. Ed. 349. * * * In Corbett v. Clark and another, 45 Wis. 403, 30 Am. Rep. 763, an order to pay a certain sum "and take the same out of our share of the grain," referring to grain harvested or growing on certain farms, accepted by the drawee, was said to be a valid bill of exchange, and the order and acceptance absolute, the words above. quoted merely indicating the means of disbursement. In Redman v. Adams, 51 Me. 429, a bill directing the drawee to charge the amount. against the drawer's share of fish caught on a certain schooner is held valid and negotiable. One of the leading cases is Macleed v. Snee, 2 Strange, 765. There a bill of exchange was dated May 25th for the payment of a certain sum one month after date, "as my quarterly half-pay to be due from 24th of June to 27th of September next, by advance." This was held a negotiable bill of exchange. In Spurgin v. McPheeters, 42 Ind. 527, an instrument in the following form

B.& B.BUS.Law-41

was said to possess all the requisites of a bill of exchange: "Greencastle, Ind., Aug. 22d, 1870. Mr. D. M. Spurgin-Sir, please pay to Jesse McPheeters, or order, the sum of one hundred and nineteen dollars on said bill of 134 in. lumber, and oblige the firm of Geo. W. Hinton & Co."

In Whitney v. Eliot National Bank, 137 Mass. 351, 50 Am. Rep. 316, the drafts or bills of exchange were in the ordinary form except that they contained the direction to "charge the same to account of 250 bbls. meal ex schooner Aurora Borealis." The court said: "This direction to charge the amount of the bills to a particular account, we think, does not make them payable conditionally, or out of a particular fund; they are still payable absolutely, and are negotiable, and do not constitute an assignment of a particular fund, or of a part of a particular fund. *

*

* is merely declaratory of Plaintiff and defendant

Our negotiable instrument law the common law upon the subject. * agree upon the abstract proposition of law involved in the controversy. Counsel for defendant concedes that an instrument, negotiable in itself, is not changed in character, or rendered nonnegotiable "by a recital of the consideration or a direction as to how the drawee shall reimburse himself"; but insists that the insertion of the words "on account of" has the same effect as the words "out of the proceeds of." The controversy is thus narrowed down to whether the words "on account of contract between you and the Snyder Planing Mill Co." amount to a direction to pay out of a particular fund, or, on the other hand, are to be considered as simply indicating the fund from which the drawee, Lightner, might reimburse himself. Many of the cases attach but little importance to the words "account of," and give the same effect to them as to the words "out of." 7 Cyc. 579. * * We are of the opinion that these orders cannot be construed as drawn upon a particular fund. Beyond question, there are many authorities which hold similar expressions to indicate an intention to charge a particular fund. * * * Averett's Adm'r v. Booker, 15 Grat. (Va.) 163, 76 Am. Dec. 203; Rice v. Porter's Adm'rs, 16 N. J. Law, 440; 7 Cyc. 578 (b).

*

The weight of authority and reason supports the proposition that the words amount to no more than an indication of the fund from which the drawee is to reimburse himself. The words used are substantially the same as though the orders read "and charge to account of contract with Snyder Planing Mill Company," or "credit to account of contract," etc.

* ** *

In our view they were negotiable and the language, moreover, not even ambiguous. It follows that defendant was not entitled to recoup his damages for the failure to complete the barn; and the findings of the court, therefore, require a judgment for plaintiff for the amount due upon the order.

* * *

NATIONAL BANK OF NEWBURY v. WENTWORTH, (Supreme Judicial Court of Massachusetts, 1914. 218 Mass. 30, 105 N. E. 626.) BRALEY, J. The plaintiff bank is the indorsee, and the presiding judge was warranted upon the evidence in finding that it is a holder in due course unless the words written by the defendant on the face of each note, "value received as per contract," make his

promise as maker conditional upon the performance by the payee of the preceding contract between them appearing in the record, for the sale and shipment of lumber. * * * If the words had been, "subject to the contract for lumber," or even "subject to the contract,' the principle invoked would have been applicable. The notes would not have been the defendant's unconditional promise to pay a definite

sum.

* * *

*

But while the defendant doubtless intended to guard against the payment of money for which in the future he did not receive an equivalent, * * the language used does not affect the payment of the amounts shown by the notes. By their position, the words well might lead the plaintiff who is not charged with actual notice to understand that they were not to be disconnected and applied to an independent outstanding agreement by which the promise was to be modified or restricted, but they referred solely to the consideration for which the notes were given. * * * We are unable consequently to distinguish the case at bar from Taylor v. Curry, 109 Mass. 36, 12 Am. Rep. 661, where the phrase relied on to destroy negotiability was, "for value received on policy No. 33,386." It was said by Mr. Chief Justice Chapman in delivering the opinion of the court: "The words * * * do not express any contingency as to the payment of the notes, or refer to any fund out of which they are to be paid, but appear to refer to the consideration for which they are given. Such a reference may be for mere convenience, or for any other reason, but it cannot be interpreted as a modification of the promise."

* *

By the terms of the report judgment is to be entered for the plaintiff for the amount of each note with interest from maturity, and costs.

FIRST NAT. BANK OF SNOHOMISH v. SULLIVAN et al.

(Supreme Court of Washington, 1911. 66 Wash. 375, 119 Pac. 820, Ann. Cas. 1913C, 930.)

ELLIS, J. The only question presented for our consideration is that of the negotiability or nonnegotiability of the note. * * * The note here in question obviously conforms to this definition, unless it is made conditional as to amount or uncertain as to time by the following sentence: "This note is given to take up the freight and rehandling of N. P. car 43607 and proceeds from resale of said car shall apply on this note." It is clear that the note, exclusive of this sentence, is not obnoxious to the definition in either of these particulars. * * * They do not stipulate either expressly or by any implication, necessary or otherwise, that the note shall be payable only out of the proceeds of the resale of the car of shingles. Nor do they make the payment contingent upon or subject to a resale. There is no provision that demand shall be postponed to a resale. This note like every other written instrument must be construed as a whole so as to give effect to every part of it if possible. This can only be done. by holding the whole amount due and payable on demand, and that the proceeds of the sale of the shingles in case of a resale before demand. shall be applied on the amount, but, in case of resale after demand, the proceeds shall go to reimburse pro tanto the makers of the note. This gives effect to every word in the note, and makes it an absolute