CENTRAL TRUST CO. OF N. Y. v. N. Y. EQUIPMENT CO

CENTRAL TRUST CO. OF N. Y. v. N. Y. EQUIPMENT CO. N. Y. Supreme Court, General Term, First Department; December, 1893. Fills, notes, etc. ; form an interpretation.] A lease contained an express agreement by lessee to pay, as rent, a specified sum per quarter, and stated that such rent was evidenced by certain, promissory notes executed by the lessee •■ but the instruments executed by the lessee as evidence of the rent contained no express promise to pay. Held, that the -lease and such instruments must be construed together, and the intent of the parties-should control, and that in an action against the maker of such instruments', he could not contend that they were not promissory notes. Appeal by plaintiff from an interlocutory judgment of a. Special. Term of the Supreme Court, first district, sustaining defendant’s demurrer to the complaint. The action was brought by the Central Trust Company of New York against the N. Y. Equipment Company upon eight written instruments known as lease warrants. The complaint pleaded each instrument as a separate-cause of action. The form of each instrument was the same except as to date and number, and the statements of the several causes of action were substantially alike. As a first cause of action it was alleged, among other things, that defendant made and executed twenty certain promissory notes in accordance with the provisions of a lease entered into by defendant; that in and by one of these promissory notes dated April I, 1889, the defendant for value received promised to pay without grace on a day mentioned to the order of itself, $4,500 at the office of the plaintiff in the City of New York. A copy of said promissory note was then set forth as follows: “ $4,500. “ New York, April 1, 1889. “Without grace on the first day of July, 1891, there-will be due to the order of the New York Equipment Company forty-five hundred dollars, for rental of 300 box cars under contract of lease of even date herewith, payable at the office of the Central Trust Company in the City of New York. “ The New York Equipment Company, “ No. 9. “ By Jas. Irvine, President.” It was then alleged that such note was endorsed by-defendant and transfeired to plaintiff before maturity and that at maturity it was presented at the place therein specified, and payment demanded, which was refused, and that no part thereof had been paid. By the lease, annexed to the complaint, defendant leased from the U. S. Rolling Stock Company specified railroad equipments and rolling stock for five years, and as rent agreed to pay the Rolling Stock Company $4,500 per quarter, which rent was stated to be evidenced by twenty “ promissory notes ” executed by defendant for $4,500 each. Defendant demurred to the complaint on the ground that it did not state facts sufficient to constitute a, cauge of action. The Special Term sustained the demurrer and plaintiff appeals. Adrian H. Joline and He?iry W. Calhoun {Butler,. Stillma7i & Hibbard, attorneys) for appellant. I. The instruments in question are in the form of due bills, and are promissory notes (Citing Kimball v. Huntington, 10 Wend. 675; Russell v. Whipple, 2 Cowen, 536; Sackett v. Spencer, 29 Barb. 180; Daniel's Negotiable Instruments, 4th Ed. §§ 36-39; Edward’s Bills, 3rd Ed. § 141; 1 R. S. §§ 1, 5; Id. 8th Ed. p. 2499; Piets v. Johnson, 3 Hill, 112; Carver v. Hayes, 47 Me. 257; McClelland v. Norfolk Southern R. R. Co., 110 N. Y. 469). II. The reference in the instruments to another instrument does not affect their negotiability (Citing Jury v. Barker, Ellis, Blackburn & Ellis, 459; Taylor v. Currie, 109 Mass. 36; Chicago Ry., etc., Co. v. Merchants’ Bank, 136 U. S. 268; Daniels Negotiable Instruments, §§ 51a, 790, 797; Wells v. Brigham, 60 Mass. 6; Mabie v. Johnson, 8 Hun, 309; McClelland v. Norfolk Southern Ry. Co., 110 N. Y. 469,474; White v. Vermont, etc., R. R. Co. 21 How. U. S. 575; Jones on Corporate Bonds and Mortgages, § 185; Harvey v. R. I. Locomotive Works, 93 U. S. 664; Heryford v. Davis, 102 Id. 235; Davis v. McCready, 17 N. Y. 230; Saddler v. White, 14 La. Am. 173; Brooks v. Christopher, 5 Duer, 216; Bank v. Casson, 39 La. Am. 865; Craig v. Sibbett, 15 Pa. St. 238; Patten v. Gleason, 106 Mass. 439). Thomas Thatcher and Philip G. Bartlett (Simpson, Thatcher & Bartlett), attorneys for respondent. I. The instrument is not a promissory note, because it contains no promise whatever (Citing Smith v. Allen, 5 Day, 337; Currier v. Lockwood, 40 Conn. 349; Gay v. Rooke, 151 Mass. 115). II. The instrument is not a promissory note, because it shows upon its face that its engagement is conditional (Citing Oatman v. Taylor, 29 N. Y. 649; Fletcher v. Thompson, 14 How. Pr. 308; Considerant v. Brisbane, Id. 487; Chase v. Kellogg, 13 N. Y. Supp. 351; Munger v. Shannon, 61 N. Y. 251; Brill v. Tuttle, 81 Id. 454, 457; Ehrichs v. DeMill, 75 Id. 370). See note at the end of this case. [MAJORITY — Van Brunt, P. J.] Van Brunt, P. J. This action was brought upon •eight instruments in writing, being declared upon separately. The complaint alleges as to each the plaintiff’s incorporation and that of the defendant; and that on April 1, 1889, the United States Rolling Stock Company and the defendant made and executed a certain agreement of lease, a copy of which is annexed to the complaint, and at the time of the execution and delivery of said agreement, said defendant made and executed its twenty certain promissory notes in writing in accordance with said agreement of lease, and that on or about April x, 1889, said defendant made its certain promissory note, being one of the twenty promissory notes in writing above referred to, dated on the last mentioned ■day, wherein and whereby for value received, it promised to pay without grace on June ist, to the order of itself at the office of the plaintiff in the City of New York, forty-five hundred dollars, and said promissory note is then set out in haec verba. The complaint then alleges that said note was thereupon duly indorsed in blank by the defendant, and as so indorsed duly transferred to the plaintiff before maturity thereof and for value, and the plaintiff is now and ever since has been the holder thereof ; that at the maturity of said note the same was duly presented for payment at the place therein specified, and payment demanded and' refused, and that the whole amount thereof with interest from July i, 1891, is now due and payable to the plaintiff from the defendant. The lease referred to in the complaint between the United States Rolling Stock Co. and the defendant, The N. Y. Equipment Co., so far as it is necessary to state the same for a proper consideration of the question presented upon this appeal, is as follows : “ Equipment Lease by the United States Rolling Stock Co., hereinafter called the lessor, to The New York Equipment Co., hereinafter called the lessee. “ The lessee above named hereby acknowledges that, it has leased from the lessor for a" period of five years and has taken into its custody at Memphis, Tenn., the following railroad equipment and rolling stock, to wit: Three hundred (300) box cars, marked ‘ Central Railroad & Banking Co. of Georgia,’ and numbered 2600 to 2899, both inclusive, and in consideration of the use of said property and the stipulations hereinafter contained, said lessee agrees with said lessor as follows : “ The said lessee agrees to pay to the said lessor, as rent for the use of said property, the sum of $4,500 per quarter, which rent is evidenced by the twenty promissory notes executed by said lessee for the sum of $4,500 each, payable, respectively, on the first day of each successive quarter on and after July 1, 1889. Said railroad equipment and rolling stock were at the time of shipment, and still are, 'the exclusive property of said lessor, and said lessee agrees to hold the same until the determination of this lease, on or before April I, 1894, A. D., at the lessee’s own risk, and on said April 1, 1894, or the prior determination of this lease, the lessee shall and will return the same to the lessor in their present good order and condition, reasonable wear and tear alone excepted, and without excuse for non-delivery on account of any accident, unavoidable or otherwise, unless the same shall have been purchased by the said lessee from the lessor within the time and in the manner hereinafter specified.” The defendant demurred to the complaint upon the ground that it did not state facts sufficient to constitute a cause of action. This d'emurrer was sustained upon the •ground that the written instruments set up in the complaint were not negotiable promissory notes, there being no promise on the part of the defendant to pay. It is a familiar rule in the interpretation of statutes that the great principle which is to control, is the intention of the Legislature in passing the same, which intention is to be ascertained from the cause or necessity of making the statute, as well as other circumstances. A strict and literal interpretation is not always to be adhered to, and where the case is brought within the intention of the makers of the statute, it is within the statute, although by a technical interpretation it is not within its letter. It is the spirit and purpose of a statute which are to be regarded in its interpretation, and if these find fair expression in the statute, it should be so construed as to carry put the legislative intent, even although such construction is contrary to the literal meaning of some of the provisions of the statute. A reasonable construction should be adopted in all cases where there is a doubt or uncertainty in regard to the intention of the law-makers (People ex rel Wood v. Lacombe, 99 N. Y. 43). The same principle obtains in the interpretation of contracts. Contracts are to be construed so that they may have effect according to the intention of the parties, if that can be done consistently with the rules of law (Parsell v. Eggert, 54 N. Y. 18). Many other cases might be cited sustaining this proposition, which seems to be so self-evident as not to require the support of adjudications. There is another familiar rule, that in order to ascertain the intention and meaning of the parties where different instruments in relation to the same subject matter are executed at the same time, these instruments are to be read together (Marsh v. Dodge, 66 N. Y. 533). Applying these rules of construction to the instruments declared upon in the complaint, can it be for a moment doubted that it was the intention of the parties to the lease out of which the- instruments particularly declared upon arose, and which were executed at the same time, that these latter instruments should be treated as promissory notes ? By the terms of this lease, they say that the rent which is to become due is evidenced by the twenty promissory notes executed by said lessee for the sum of $4,500, each payable respectively, etc. Now the parties to the lease having declared that these -evidences of rent shall be promissory notes and considered as promissory notes, how can one of the parties to that instrument recede from the definition which it has put upon its own contract ? It is not necessary to go to law books and to quote adjudications in order to understand what the intention of the parties to this contract was. The defendant has declared what these instruments are, and has induced the other party to the contract to take them in that form, declaring them to have a certain legal effect, and when ■called upon to pay, it says its declaration is untrue. We do not think for a moment that the defendant can stand •in a court of justice and be permitted to raise such a plea. It is urged upon the part of the respondent that these writings are not promissory notes because they do not contain any promise to pay; and that they are not acknowledgments of anything which is due, but of something which-is to become due. But referring to the instrument out of which these papers grew there is an express promise to pay the sum evidenced by these twenty promissory notes. The lessee, the defendant, agrees to pay to the lessor as rent for the use of said property the sum of" $4,500 per quarter. The lessee is recited to be in possession of the property, which is recited to have leased from the lessor for the period of five years, and that the lessee-has promised to pay the rent evidenced by these promissory notes. Here is a promise to pay, if nowhere else ; although we think it is a forced construction that in the-instruments themselves a promise cannot be inferred when they are construed in connection with the instrument of which they formed a part. It seems to be clear, therefore, that the claim that these writings are mere statements-that amounts will be due to the signer, cannot for a moment prevail. This seems to be another absolutely convincing consideration that these parties supposed that they were making negotiable promissory notes to evidence the amount of rent which woüld fall due under the lease, and for the use of the property of which the lessee, the defendant, was in possession. We are of opinion, therefore, that the judgment should be reversed with costs, and with leave to the defendant to answer over upon payment of the costs below and of this appeal. O’Brien and Parker, JJ., concurred. Note on the Present Rule Allowing Several Instruments to be Read and Construed Together. At common law two writings, though both sealed and executed at the same time, and between the same parties, could not be read together for the purpose of varying the effect of one of them, unless (i) one referred to the other, or (2) they were each part of one and the same transaction, or (3) they related to the same subject matter. Cornell v. Todd, 2 Den. 130. Here two simultaneous deeds of adjoining tracts, in one of which was an exception of a piece of land which lay partly within the limits of that conveyed by the other. —Held, that at law they could not be read as one for the purpose of excepting such part. The remedy was in equity for a reformation. If one was under seal and the other an unsealed writing, the latter could not be read in evidence as qualifying terms of the sealed instrument. Bronson v. Fitzhue, 1 Hill, 185, Here in an action on the case, it appeared that one or two common carriers jointly charged with negligence agreed with plaintiff by simple contract that his partner be released from liability; and he then set up the release as bar to the action. On objection to reception of evidence,—Held, that the agreement not being under seal did not qualify the release so as to present the discharge of both. The legal effect of a sealed instrument cannot be varied by a contemporaneous written contract not under seal. The same principle was vigorously asserted in Nelson v. Sharp, 5 Hill, 484, where the court assert the general rule that, to qualify a sealed instrument, or show a defeasance different from what the instrument itself contains, the party shall be put to show another writing between the same parties also under seal. In equity, a different rule prevailed, and an unsealed instrument could vary a sealed one. Shaw v. Leavitt, 3 Sandf. Ch. 163. Here it appeared that the plaintiff gave a banking company a bond under seal for payment of money accompanied by a transfer of securities reciting that the transfer was collateral to the bond. They also sent a letter at the same time, stating that the bond and transfers were intended as a security for a loan.—Held, that the letter was competent evidence.. After the adoption of the Code of Procedure the more liberal rule was applied by the courts in actions of a common law nature. Hanford v. Rogers, n Barb. 18. Here in an action upon a guaranty, it appeared that the defendant by a sealed instrument assigned to plaintiff a bond and mortgage, covenanting as to the amount due. On the same day he indorsed upon the bond an unsealed guaranty of its payment. The trial court non-suited the plaintiff because the guaranty was not under seal; and this judgment the General Term reversed, holding that the two instruments, could be read together. In Rogers v. Smith, 47 N. Y. 324, it was held that one seal would do for both instruments. In that case the promissory note sued upon was accompanied by a sealed written agreement.—Held, that as they were contemporaneous writings between the same parties and on the same subject, and the action was between the same parties or their representatives, the instruments could be read and construed as one paper, with the effect of reducing the claim ■upon the note. In Parks v. Comstock, 59 Barb. 16, papers successively executed, •though in the same transaction, or relating to the same transaction, were construed together so as to qualify a specialty by the unsealed writing. The action was brought 'to have a transfer of stock with •covenant for title cancelled and to recover the stock. It appeared that an unconditional transfer of stock was given afterwards and a •written unsealed memorandum of the object of the transaction was made on the same day, and at the same interview, but subsequent to the sealed paper, and in response to a request for a memorandum of the transaction, and was signed by the party and the surety. This paper indicated that the title to the stock, which had been in form absolutely transferred, was to be determined by litigation. The reception of the paper in evidence was objected to on the ground that one was sealed and the other not, and also on the ground that the unsealed was made subsequent to the sealed. The court held that the two instruments must be regarded as delivered at one and the same time, for the same purpose, and should be treated as different parts of the same instrument and construed together. One defined the object of the other. The technical reason given by the court well illustrates the transition under the Code, from the common law to the equity doctrine. The court say in effect that if the instruments were simultaneous, one seal must be deemed enough for both. If the defeasance was subsequent, it was, nevertheless, good in equity, though without seal, and, therefore, must be good in a common law action under the Code. In Wilson v. Randall, 67 N. Y. 338, a subsequent deed was construed in connection with the prior agreement which was not under seal. Here the deed was executed two months after the executorycontract ; the action was to recover back money paid by mistake, .on an allegation of a deficiency in the area of the land. For a discussion of the question of the effect of promissory notes for instalments under a continuing contract, see note in 30 Abb. N. C. 15.