ance with the instructions, etc.; and one | per agreement of certain date means nothing who draws bills upon another by agreement more than that the deed was a satisfaction may write, "As per agreement, I have of the contract, and the grantee in the deed drawn," etc., meaning in accordance with is not affected by the preliminary contract." agreement, or subject to our agreement, or as by agreement authorized, I have drawn, etc. For the reasons thus assigned, it is ordered and adjudged that the decree heretofore entered in this case be set aside, and that the judgment of the Court of Appeal, here made the subject of review, be amended by reducing the principal amount thereby awarded to the plaintiff to $106.14, thus allowing defendant $193.86, in reduction of the amount claimed by plaintiff. It is further decreed that plaintiff pay all costs incurred in this litigation subsequently to the tender made by defendant in the district court. Provosty, J., dissenting: I do not suppose there will be any denial that 3 R. C. L. 918, states the law correctly on the point involved in this case when it says that: "The reference in a bill or note to some extrinsic agreement, in order to destroy its negotiability, must be such as indicates that the paper is to be burdened with the conditions of that agreement," and that: "Accordingly the negotiability of a note is not affected by a reference which is simply a recital of the consideration for which the paper was given, or a statement of the origin of the transaction, or by a statement that it is given in accordance with the terms of a contract of even date between the same parties." Now as I read the phrase, "as per contract," it means nothing more than what is here stated not to affect the negotiability of a note; and the district judge and the judges of the court of appeal read it in the same sense. My learned colleagues would read it as being the equivalent to such an expression as "subject to conditions of contract," whereby the note would be made conditional upon the conditions of the contract being fulfilled, or, in other words, a conditional and not an unconditional promise to pay. But if that idea had been meant to be expressed, why were not words used to that effect, and why was the note given the peculiar form in which we find it, to the order of the maker, and by him indorsed in blank, so as to be payable to bearer like a bank note? And I find in a note in 30 L.R.A. (N.S.) 45, the following: "In Jury v. Barker, El. Bl. & El. 459, 120 Eng. Reprint, 580, the promise to pay in the note was, 'as per memorandum of agreement.' Lord Campbell, Ch. J., said: 'The note here is an absolute and unconditional promise as to the payer, the payee, the amount, and the date. If the addition of the words in question make the promise conditional, it is on the defendant to show that, and he has not done so.' "And a similar holding was made in Brill v. Crick, 1 Mees. & W. 232, 150 Eng. Reprint. 419, 1 Gale, 441, 5 L. J. Exch. N. S. 143." And I find in Words and Phrases, 2d series, vol. 1, "As per," the following: "Plaintiff agreed to sell defendants a half interest in mining property, advances to be made by defendants for litigation and improvements to be applied on the purchase price. By a subsequent contract the advances were to be repaid to defendants, and by a third contract a corporation to which the property had been conveyed assumed and agreed to pay the moneys advanced ‘as per' the first contract. It was held that the phrase 'as per' referred to the advancements, and did not qualify assume and agree to pay,' and hence did not abrogate the provisions of the second contract providing for repayment of the advancements. Gisborn v. Milner, 28 Utah, 438, 79 Pac. 556." Under this statement of Lord Chief Justice Campbell's the note in this case would be conditional if the fact that the consideration of a note was an executory contract made the note conditional. But the authorities cited in the original opinion herein establish the contrary, and I do not understand it to be denied that these authorities state the law correctly. To my mind my learned colleagues are overruling the White and Cason Cases cited in the original opinion, which have for many years remained unquestioned, serving as a guide to the profession and the commercial community in this state. In those cases the wohle question was, as it is in this, whether the fact that a note is given for an executory contract (which may or may not be carried out, so that the consideration of the note may fail), makes the note nonI have not time to make any extended negotiable, or, in other words, conditional. search for ascertaining what import the If it does, our honored predecessors on this courts have attributed to the expression "as bench fell into egregious error in those per contract," but under the heading of cases. For they would then have held that "As," I find in 5 C. J. 601, note, the follow-a transferee who acquires a note, knowing ing: "A recital in a deed that it was made as it to be conditional, acquires it free of In N. Y. Anno. Dig. ¶¶ 7017, 7018, the result of the decisions of the court of appeals of New York is stated as follows: "Par. 7017. In the absence of suspicious circumstances a purchaser of commercial paper is not bound to inquire whether the indorser has performed or will be able to perform the agreements into which he has entered. 7 Cyc. 941. the condition. For in those cases the trans- | Black v. First Nat. Bank, 96 Md. 399, 54 ferees acquired with full knowledge that the Atl. 88. considerations of the notes were executory contracts (rents to accrue in the future in the White Case, and advances to be made in the future in the Cason Case), and yet they were held to have acquired the notes as unconditional obligations free of equities. And to my mind the overruling of these cases is the more to be regretted, as they are in line with the jurisprudence of the great commercial states of New York, Illinois, and Maryland, to mention no others. Siegel, C. & Co. v. Chicago Trust & Sav. Bank, 131 Ill. 569, 7 L.R.A. 537, 19 Am. St. Rep. 51, 23 N. E. 417; Davis v. McCready, 17 N. Y. 230, 72 Am. Dec. 461; Maas v. Chatfield, 90 N. Y. 308; Bruce v. Carter, 7 Daly, 39; Watson v. Shuttleworth, 53 Barb. 359; to the original opinion. "Par. 7018. Knowledge that commercial paper was made in consideration of an executory contract will not affect the character of the purchaser, unless he is also informed of the breach of such contract. 7 Cyc. 948.” I therefore respectfully dissent, adhering Annotation-Reference to extrinsic agreements as affecting negotiability of bill or note. The earlier cases on this question are v. Manufacturers' Commercial Co. 30 discussed in note to Klots Throwing Co. L.R.A. (N.S.) 40. The recital in a note as to security as affecting its negotiability is discussed in the note to Zollman v. Jackson Trust & Sav. Bank, 32 L.R.A. (N.S.) 858. As to the effect of a reference to account or funds as affecting negotiability of instrument, see note to Hays v. Lapeyre, 35 L.R.A. 647 and supplemental note thereto, First Nat. Bank v. Lightner, 8 L.R.A. (N.S.) 231. extrinsic contract in such manner as to See Only a syllabus of the case of Northwestern Nat. Ins. Co. v. Southern States Phosphate & Fertilizer Co. (Ga.) supra, appears in the report of that case. The action there was upon a "certificate of insurance." The court states that this was not a promissory note, but adds that as it shows on its face that it was subject to the provisions of a policy of insurance it was a fortiori not a negotiable instrument, although it was so denomiwhen-nated in "the certificate" itself; and the court states the rule to be that a note which, on its face, is subject to the terms of the contract between the maker and the payee, is not a negotiable instrument. Where reference subjects papers to As stated in the earlier note, Ga. App. Another test was applied by the court in Greenbrier Valley Bank v. Bair (1913) 71 W. Va. 684, 77 S. E. 274. The court stated that by the law merchant one of the principal elements of negotiability is certainty of payment, and any words of the instrument rendering payment conditional or uncertain destroy it as a negotiable instrument. Within this rule the words in the body of the note immediately before the signature of the maker, "Credit the maker. Security on contract of April 20, 1905," are held to destroy the negotiability of the note. The words, "Security on con tract of April 20, 1905," are stated to | tions of any agreement. At most it is give notice to the world that it is only a a mere reference to the origin of the security on a contract of the same date; transaction and constitutes notice of what that contract is or was is not dis- the existence of the contract,' but not closed, but enough is disclosed to put of the breach thereof.' We are of the everyone dealing with the instrument opinion that the expression indorsed on upon notice. the margin of the note was intended as a mere statement of or reference to the transaction for the purpose of identification, and that it did not therefore affect the negotiability of the note sued upon." Where reference is to consideration or origin of transaction. Supplementing note. in 30 L.R.A. (N.S.) p. 43. Where the reference in a bill or note is simply to the transaction out of which it arose (Slaughter v. Bank of Bisbee (Ariz.) supra), or a recital of the consideration for which it was given, the instrument is not rendered non-negotiable. Ibid.; Dollar Sav. & T. Co. v. Crawford (1911) 69 W. Va. 109, 33 L.R.A (N.S.) 587, 70 S. E. 1089. The Negotiable Instrument Act provides that "a promise to pay is unconditional within the meaning of this act though coupled with a statement of the transaction which gives rise to the instrument." Doyle v. Considine (1915) 195 Ill. App. 311. See CONTINENTAL BANK & T. Co. v. TIMES PUB. Co. ante, 632. The defense in this case was that the note was given in consideration of the performance of a certain executory contract and that the contract was not performed by the payee; hence there was a failure of consideration for the note. In National Bank V. Wentworth (1914) 218 Mass. 30, 105 N. E. 626, the words, "as per terras of contract," written before delivery by the maker of a note on the face thereof, after the words "value received," are held not to make the promise conditional upon the performance by the payee of the contract to which reference is made. The court states that "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. In Slaughter v. Bank of Bisbee (Ariz.) supra, a reference made in a note after the signature thereto that it is "for payment under contract of even date" is held not to render the note non-negotiable. The court argues that "if it can be said that the expression, 'for payment under contract of even date;' fairly | or reasonably means that the note was given and its payment was to be made 'subject to the terms of the contract' therein referred to, it would follow that The presence of the words, "as per if the contract was executory, the pay- contract," written at the time of the exment of the note was subject to its ecution on the back of the note which conditions. There is nothing in the lan- was given as part consideration of a guage to indicate that the contract re-written contract for the sale of land, ferred to was an unexecuted contract. From what appears in the expression the contract may have been fully performed and executed. It has neither subject nor predicate; it does not assert or affirm anything it is a mere combination of words from which it may be inferred that a contract had been entered into between somebody on its date. But, while the defendant doubtless intended to guard against the payment of money for which in the future he did not receive an equivalent, and the payee has gone into bankruptcy, the language used does not affect the payment of the amounts shown by the notes." Compare with CONTINENTAL BANK & T. Co. v. TIMES PUb. Co. It does not mean the same, as suggested by appellant, as the expression, 'this note is made subject to contract of even date,' for in the latter expression there is carried the idea of a subsisting and unfulfilled contract, an executory contract. . . . In the case at bar there is an absence of language to indicate that this note was to be burdened with the condi the contract providing that if the maker was not satisfied upon an inspection of the land the note should be returned, does not affect the negotiability of the note, that is, the right of a bona fide purchaser for value, before maturity, and in due course of business, is not affected thereby. Snelling State Bank v. Clasen (1916) 132 Minn. 404, L.R.A. 157 N. W. 643. Compare with CONTINENTAL BANK & T. Co. v. TIMES PUB. Co. In Waterbury-Wallace Co. v. Ivey (1917) 99 Misc. 260, 163 N. Y. Supp. 719, affirmed without opinion in (1917) App. Div. -, 167 N. Y. Supp. 1133, an action by the payee upon a note dated November 13, 1915, containing the words tract of even date herewith between E. "as per contract of November 12, 1915," is given in accordance with a land conafter the words "value received, with interest," the defendant demurred upon the theory that the reference to the contract must be construed as a promise to pay in accordance with the terms of that contract, and that the latter was accordingly made part of the note; this being so, it was shown that the note was to be paid out of a particular fund, and that only. The court treated this as requiring a decision upon the negotiability of the note and, in holding that the negotiability was not destroyed by this reference to the contract, the court cited with approval the language used in National Bank v. Wentworth (Mass.) supra, and the decision in Taylor v. Curry, 109 Mass. 36, 12 Am. Rep. 661, discussed in the earlier note. In Coleman v. Valentin (1917) S. D., 164 N. W. 67, a recital in a note that "this is one of a series of notes given in payment of land described in a contract this day executed" is held not to render the note non-negotiable. A statement in a note that "this note A recital in a note that it was "in part payment for land in Logan and Boone county, and upon which a lien has been reserved to secure this note," is held not to render the note non-negotiable, in Dollar Sav. & T. Co. v. Crawford (1911) 69 W. Va. 109, 33 L.R.A. (N.S.) 587, 70 S. E. 1089. The recital in a note,-namely, "payment on contract No. L. 854,"-does not destroy its negotiability. Metropolitan Nat. Bank v. Vanderpool (1917) Tex. Civ. App. 192 S. W. 589. W. A. E. Insurance Metropolitan L. Ins. Co. v. McTague, 49 N. J. L. 587, 60 Am. Rep. 661, 9 Atl. 766; Cushman v. United States L. Ins. Co. 70 N. Y. 72; 36 Cyc. 436; Villone v. Perticara, 62 Misc. 257, 114 N. Y. Supp. 801; Kelly v. Ancient Order of Hibernians, 9 Daly, 289; Coleman v. Lord, 96 Me. 196, 52 Atl. 645. Spear, J., delivered the opinion of the court: This is an action of assumpsit to recover thirteen weeks' sick benefit at $5 per week. For other cases, see Insurance, VI. b, 3, j, At the conclusion of the evidence the presidin Dig. 1-52 N. S. ing justice ordered a verdict for the defendant. Upon exceptions to this order the case comes to the law court. The plaintiff did not receive a policy of insurance from the defendant society, as it issued none, but became a beneficiary under a contract, manifested by its constitution and by-laws. Article 27, § 1, reads as follows: "Law Concerning Sick Benefits.—A member who is sick and unable to work at any occupation that can bring him in compensa Messrs. N. B. & T, B. Walker, for de- tion, and who shall have complied with the fendant: Injury and pain, without any impairment of the general health, do not constitute sickness within the meaning of an insurance contract, Note. -As to losses covered by policy providing for payment of sick benefit, see annotation following this case, post, 642. conditions in the clause of the present article, will receive of the society $5 per week during a period of time not exceeding thirteen (13) weeks in one year. "2. To be entitled to sick benefits it will be necessary: First, that a member shall have been a member of the society for six (6) months. Second, that he be in good standing. Third, that he possess an insignia. Fourth, that he shall have given notice of his sickness to one of the members of the visiting committee if he is a resident member and be visited during his sickness by at least three of the members of the said committee and furnish a physician's certificate each time that said committee shall demand it." In view of the provisions of § 2, it is apparent that the plaintiff's declaration, in its present form, will not permit the admission of evidence necessary to enable him to maintain his action. But as the declaration may be amendable, we do not feel justified in allowing the decision of the case to rest upon this defect. There is an objection, however, which goes to the merits of the case, and upon this we will base our conclu sion. The plaintiff, in direct examination of a physician called by him, propounded this question: Q. Whether or not, medically speaking, a man with a broken leg or any person with an ailment other than disease, is a sick person, medically speaking. The court: Sickness has a well-defined meaning, and if this witness should testify that something was sickness that the law does not recognize as sickness, it would not be for the jury. There is no question but that a man with a broken leg cannot work. He suffers great pain. There is no question about that. We all know it. Do we know it just as well as a doctor? Counsel for the plaintiff: I believe the plaintiff ought to show that, at least medic ally speaking, a man with a broken leg or any ailment other than disease is, as we say, a sick man, and whatever the answer may be, further we will say that any congregation of men, combining to be an association for benevolent purposes, will at least have in mind such things as, medically speaking, render a person unfit to do such work as he had been doing prior to that time. That is the only purpose, whether or not at that time when the man made the application he was medically sick. The question was excluded and exceptions taken and allowed. a disability due wholly to an accident can be regarded as sickness under a sick benefit contract of indemnity. There are several kinds of indemnity insurance contracts, such as life insurance, health insurance, accident insurance, sick benefit insurance, and so on, each occupying its own field of operation, and intended to apply to its own peculiar kind of disability. The case before us iliustrates the distinction between an accident and sick benefit indemnity. The plaintiff by accident broke his leg. As a result he suffered the inconvenience, disability, and pain incident to his injury. Every fractured leg is accompanied by similar misfortunes, differing only in degree. A fractured leg may also bring more or less physical illness, resulting from the abnormal conditions to which the patient, for the time being, is compelled to submit, yet not im pairing his general health. If the plaintiff's contention is tenable, and the physical illness which flows naturally and normally from an accident can be classed as sickness within the meaning of a sick benefit indemnity, then it follows that a person fortunate enough to hold, at the time of his injury, both an accident and a sick benefit contract, may be able to recover under each for the results of one and the same cause. Otherwise, if only one is available, which one? The bare statement of this contention shows the incompatibility of the two forms of contract. They are fundamentally different. One is predicated upon injury; the other upon disease. One is based upon the theory of injury from accident; the other upon the theory of sickness from disease. These inherent distinctions lead to the rule that the accident contract is intended to apply to all cases of disability which are the natural and ordinary results of external physical injury due to accident; the sick benefit to all cases of disability which are the natural and ordinary results of dis ease arising from a pathological condition. There is no evidence in the plaintiff's case tending to show that the external injury, from which he was suffering and by which he was disabled, was the natural and ordinary result of disease arising from a pathological condition; hence the entry must be: This raises the direct question whether Exceptions overruled. Annotation-Insurance: losses covered by policy providing for payment of sick benefit. The question what constitutes disability within the meaning of accident or health policies is covered in the note to Holcomb v. Grand Lodge, B. R. T. L.R.A. 1917B, 108, and earlier notes there referred to. As to construction and effect of condition in accident or health policy that insured must be confined to the house to entitle him to benefit, see notes to Breil v. Claus Groth Plattsdutschen Vereen, 23 |L.R.A.(N.S.) 359, and Metropolitan Plate ! |