Woods v. North , 84 Pa. 407 ( 1877 )

Mr. Justice Sharswood

delivered the opinion of the court,

It is a necessary quality of negotiable paper that it should be simple, certain, unconditional, not subject to any contingency. It would be a mere affectation of learning to cite the elementary treatises and the decided cases which have established this principle. It is very important to the commercial community that it should be maintained in all its rigor. Applying it to the note sued upon in this case, we are of opinion that it violates this rule. If it had been made payable at sixty days, with five per cent., it would have been objectionable as usurious on its face. It would not however on that account have invalidated the note or destroyed its negotiability. A negotiable note may be made payable with interest from its date, and if more than lawful interest is stipulated for, it does not in Pennsylvania make the contract void, but only the usury. Hence such a note is sufficiently certain. It is payable at maturity with lawful interest. But, in the paper now in question there enters as to the amount an undoubted element of uncertainty. It is a mistake to suppose that if the note was unpaid at maturity, the five per cent, would be payable to the holder by the parties. It must go into the hands of an .attorney for collection. It is not a sum necessarily payable. The phrase “collection fee” necessarily implies this. Not only so, but this amount of percentage cannot be arbitrarily determined by the parties. It must be only what would be a reasonable compensation to an attorney for collection. This, in reason and the usage of the legal profession, depends upon the amount of the note. Five per cent, would probably be considered by’ a jury as a reasonable compensation upon the collection of a note of $377. But if it were $3000 they would probably think otherwise, and certainly so if it were $30,000. How then can this note be said to be certain as to its amount or that amount unaffected by any contingency ? Interest and costs of protest after non-payment at maturity are necessary legal incidents of the contract and the insertion of them in the body of the note would not affect its negotiability. Neither does a clause waiving exemption, for that in no way touches the simplicity and certainty of the paper. But a collateral agreement as here, depending too as it does upon its reasonableness, to be determined by the verdict of a jury, is entirely different. It may be well characterized, like an agreement to confess a judgment was by Chief Justice Gibson, as “luggage” which negotiable paper, riding as it does on the wings of the wind, is not a courier able to carry. If this collateral agi’eement may be introduced with impunity what may not be ? It is the first step in the wrong direction which costs. These instruments may come to be lumbered up with all sorts of stipulations, and all sorts of difficulties, contentions and litigation result. It is the best rule obsta principiis.

Judgment reversed.