(220 P.)

live at Helix; I was postmaster there, and I, on October 19th, and Kerley's testimony exhave lots of friends there, and I think I can pressing his conclusion that he informed Moltake a note there and get it signed up by a strom and Shannon of the agreement made lot of my friends;' and I said, 'All right; get by him with McCook, and Kerley's testimony it done to-morrow.' * * He brought up the point it might be hard to get that done by as to his conversation with McCook on Satto-morrow, and get the note fixed by tomorrow; and I told him to go ahead and get whatever signers he could, and bring the note back to me to-morrow. Joe made the remark he could get a lot of signers, and he could get as many as 20 signers;" and "I told him to go ahead and get the matter fixed up."

[1] It will be observed that the promise is "to pay to the order of the bearer." The respondents contend that the instrument is not negotiable. The argument is that to be

'went through the regular routine and num-, when Shannon told him that there were to bered up." The note continued to remain in be 20 signatures to the note. the possession of the bank, There is evidence to the effect that the bank records contain entries made in McCook's own handwriting showing "that some of his [Kerley's] other notes were paid up by that [the one in dis-negotiable an instrument must be payable eipute] note; "but there is no evidence that any of such "other notes" were surrendered to Kerley. The evidence is silent as to the time when any entries were made showing payment of "other notes."

Kerley says that he went to the bank "either the next day," which would be Saturday, "or a couple of days after that," which would probably be Monday, and told McCook:

"I wanted to get more names on the notethat is, more signatures on it-and asked him to let me take it out and get some more; and he told me if I could get any more to bring them into the bank and have them sign it there."

ther to bearer with the right of transfer by delivery or else it must be payable to order with the limited right of transfer by the payee by indorsement and delivery, and that, if the instrument be treated as payable to order, the word "bearer" is not such a designation of the payee as complies with the Negotiable Instruments Law. The position taken by the plaintiff is that the instrument is payable to bearer in the sense that it is transferable by delivery without indorse

ment.

Our attention has not been directed to any reported adjudication dealing with an instrument exactly like the one presented here. The language "to the order of the bearer" is Kerley further says that at that time, unusual. However, the writing on its face whether Saturday or Monday, he informed makes it plain that the signers intended to McCook that he had told Molstrom and Shan-execute a negotiable promissory note. When non that he was "to get 20 signatures upon that note."

Molstrom went to Pendleton on the night of the 15th, and on the next day, Saturday, he learned that the note had been placed in the hands of the bank; and on Monday he received a notice from the plaintiff stating that the bank had the note. Molstrom says that he tried "to get hold of Kerley" on Saturday or Monday, and "finally got ahold of him on Tuesday

and trotted him

bills of exchange first came into use choses in action were in general nonassignable, and so, for the purpose of indicating the intention of the parties to make an instrument assignable and negotiable, it became the custom to make the instrument payable to order or to bearer; and hence, also, when promissory notes subsequently came into use, the same words were employed to indicate the same intention of the parties. Tiedeman, Commercial Paper, §§ 6 and 21. Ever since bills of exchange and promissory notes have been recognized as negotiable instru

right across the street, and we went to the bank." Kerley says that McCook showed to Molstrom the controverted note and the col-ments, and as such have to a large degree lateral paper held by the bank; that Molstrom told McCook that there were to have been 20 signatures to the note, and that he did not think he should be liable, since that number of names did not appear on the instrument. Kerley also says that he told Molstrom, who was "pretty mad," that if he did not want his name on the note "I would try to get some one else to go on and try to get the other signatures on it," and

been given currency as money, the words "bearer" and "order" have been the conventional signs of negotiability, although equivalent words have been likewise recognized as signs of negotiability; and when by section 7793, Or. L., it is declared that an into order or to bearer," and by section 7802, strument to be negotiable "must be payable Or. L., it is stated that, if the word "order" or the word "bearer" is not used, some term that in the same conversation "McCook told or terms must be used which clearly indicate me I had better go out and get some more an intention to conform to the requirement signers on that note. * * He told me to get some more signers and bring them in- of the "Negotiable Instruments Law," the to the bank and let them sign it there." statute merely announces what the law alMolstrom testified that he told McCook that ways has been since negotiable instruments the note "is a fraud and obtained by mis- came into use. 8 C. J. 151; 3 R. C. L. 876; representation," and that "there were to be Essig v. Porter, 63 Ind. App. 318, 112 N. E 20 names" on the note, and that thereupon 1005; Wettlaufer v. Baxter, 137 Ky. 362, McCook said to Kerley, "I think you had 125 S. W. 741, 26 L. R. A. (N. S.) 804. See, better get more names." When Molstrom also, section 7976, Or L. We have before us, told McCook that there were to be 20 names therefore, a writing which contains, not one, the latter did not assert that he did not but both the words which above all others know when he received the note that there have always been used to indicate an intenwere to be 20 names. When Shannon talked tion to invest a writing with negotiability. with McCook about two months after Octo- Although the intention of the makers to a ber 15th the latter "didn't say anything" written instrument may be manifest, the

(220 P.)

Does the writing in controversy comply with the requirements of the law? The respondents contend, as already stated, that the mandate of the statute is that a note must be made payable either to order or to bearer; that the note in dispute is not payable to bearer because the words "the order of" cannot be eliminated from the writing without making a contract different from the one signed by the maker; that if the words "the order of" are retained and given their natural meaning the result will be a writing payable to the order of a payee who is not indicated with the certainty required by the statute.

The Negotiable Instruments Law defines instruments payable to order and instruments payable to bearer, and prescribes how they may be drawn and how they may be transferred to a holder. Section 7800, Or. L., so far as it is material here, reads thus: "The instrument is payable to order where it is drawn payable to the order of a specified

writing cannot, it is true, be deemed a nego-any contrariety of judicial opinion existed tiable paper if it does not contain all the concerning any given phase of the law, the essentials prescribed by the Negotiable In- statute, which was designed to bring about struments Law. See Evertson v. National uniformity, usually adopted the majority Bank, 66 N. Y. 14, 19, 23 Am. Rep. 9. view. First Nat. Bank v. United States Nat. Bank, 100 Or. 264, 281, 197 Pac. 547, 14 A. L. R. 479. The Negotiable Instruments Law now declares, just as the law merchant previously declared, that an instrument to be negotiable must be payable to order or to bearer. Two classes of commercial paper were recognized by the law merchant and are now recognized by the Negotiable Instruments Law. The characteristic of one is that, to preserve for the holder all the qualities and rights of negotiability, an instrument must be transferred by the indorsement of the payee, for, by naming or otherwise indicating the person to whose order the instrument is payable, the maker records his intention to limit the negotiability of the paper by imposing the condition of indorsement when the paper is transferred by the payee; while the characteristic of the other class is that transfer may be made by delivery and without indorsement. The word "order" carries with it the condition of indorsement by the payee; the word "bearer," when not limited by any other word, imposes no such condition, and involves the right of transfer by delivery. In one instance the transfer by the payee must be by indorsement; in the other it may be but need not be by indorsement. Although section 7793, Or. L., declares that an instrument to be negotiable must be payable "to order or to bearer," and section 7976, Or. L., defines a promissory note as a writing containing a promise to pay "to order or to bearer," it does not follow that an instrument to be negotiable must contain only one word "order" or its equivalent, unaccompanied by the word "bearer," or that it must contain only the word "bearer" or its equivalent, unaccompanied by the word "order." The statute does not declare, nor did the law merchant declare, that a paper is not negotiable merely because it contains both words of negotiability, and is, for example, made payable "to the order of John Doe or to bearer." Manifestly such an instrument is negotiable, and may be treated as one payable to

* * *

person, or to him or his order. Where the instrument is payable to order, the payee must be named or otherwise indicated therein with reasonable certainty."

Section 7801, Or. L., is as follows:

"The instrument is payable to bearer (1) when it is expressed to be so payable; or (2) when it is payable to a person named therein or bearer; or (3) when it is payable to the order of a fictitious or nonexisting person, and such fact was known to the person making it so payable; or (4) when the name of the payee does not purport to be the name of any person; or (5) when the only or last indorsement is an indorsement in blank."

Section 7822, Or. L., reads thus:

"An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee

the holder thereof. If payable to bearer, it is negotiated by delivery; if payable to order, it is negotiated by the indorsement of the holder, completed by delivery."

A negotiable promissory note is defined by bearer, for the promise is to pay in the altersection 7976, Or. L., thus:

"A negotiable promissory note, within the meaning of this act, is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time, a sum certain in money to order or to bearer.

native, and one of the alternatives is to pay to bearer. Phoenix Nat. Bank v. Saucier, 102 Miss. 293, 59 South. 91; Bitzer v. Wagar, 83 Mich. 223, 47 N. W. 210; Tescher v. Merea, 118 Ind. 586, 21 N. E. 316; Gibson v. Coates (Man.) 1 West L. R. 556. If the instrument in controversy had been drawn in the alternative, as, for example, "to the order of A. or to bearer," it would be payable to bearer, and could be transferred by delivery, for such a promise is to pay either to the order of It is substantially accurate to say that the A. or to pay to the bearer, whoever he may Negotiable Instruments Law is a codifica- be. The plaintiff argues that the holding tion of the law merchant, and that, where announced in Bitzer v. Wagar settles the in

"Bearer," according to section 7982, Or. L., means the person in possession of a bill or note which is payable to bearer.

stant case, and that by force of that decision rule fails. A fictitious or nonexisting perthe disputed writing should be treated as payable to bearer; but in our view that case is not applicable here, for there the promise was to pay to the "order of Marget A. Bitzer (or bearer)," while here the promise is to pay "to the order of the bearer." One is in the alternative; the other is not.

If the words "the order of" could be ignored or eliminated the case would be free from difficulty, because obviously the instrument would in that event be payable to bearer without the condition of indorsement being imposed upon a transfer by the payee. Nor is the instant case analogous to one where an instrument is made payable "to the order of or bearer," or "to or order, or bearer," or "to A. or bearer" (Grant v. Vaughan, 3 Burr. 1516; Melton v. Gibson, 97 Ind. 158; Sivley v. Williamson, 112 Miss. 276, 72 South. 1008; Mudd v. Bank, 175 Mo. App. 398, 162 S. W. 314), because in the instant case the writing was prepared by Kerley with a typewriter, and the words "to the order of the bearer" were typed with the usual spacing, and the clear intention of the makers manifested by the writing, to which we must look to ascertain that intention, was to make the instrument transferable by the indorsement of the payee. .The words "the order of" cannot be eliminated or ignored.

son cannot be the "bearer" of a paper; nor can an inanimate payee be the "bearer"; but a natural or artificial person may be the "bearer" of paper. 3 R. C. L. 880; 20 Banking Law Journal, 362, 365: Selover on Neg. Inst. (2d Ed.) 77, 80; McIntosh v. Lytle, 26 Minn. 336, 3 N. W. 983, 37 Am. Rep. 410; Gordon v. Lansing State Savings Bank, 133 Mich. 143, 94 N. W. 741; Mechanics' Bank v. Straiton, 3 Abb. Dec. 269, 5 Abb. Prac. (N. S.) 11.

We need not inquire whether a different case would be presented if the instrument had been drawn payable "to the bearer or order," although we may assume, without deciding, that, if such were the language of the paper, it would be negotiable on the theory that the word "bearer" is not limited, and that therefore the instrument would be payable to bearer without the necessity of indorsement; or, it may be assumed, although we do not decide, that, if the instrument were payable "to the bearer or order," the promise could be treated as an alternative one, and that the writing could then be regarded as an instrument payable to bearer without the necessity of indorsement by the payee; but the assumptions mentioned can be of no avail, because the facts of the supposed case are not the facts appearing in the instant case.

It may be further contended that section 7800, Or. L., which declares:

"The instrument is payable to order where it is drawn payable to the order of a specified person, or to him or his order,"

We cannot agree with the contention of the plaintiff that the instrument may be treated as one payable to bearer without the condition of indorsement, on the theory that it is payable to a fictitious payee; nor can we accept the view suggested by the plaintiff that the paper may be deemed payable to bearer on the theory that the name of the makes the writing in dispute the same for payee does not purport to be the name of any all purposes and in all respects as it would person within the meaning of section 7801, be if it read, "Pay to the bearer or his subd. 4, Or. L. The rule, recognized by the order," and that therefore we should conlaw merchant and by the statute, which de- strue the instrument exactly as we should clares that an instrument made payable to construe it if in fact it read, "Pay to the the order of a fictitious person is payable to bearer or his order." The rule prescribed bearer, and the likewise recognized rule by the language last quoted from, section which declares that a writing payable to the 7800, Or. L., must be read and construed in order of an impersonal or inanimate payee, the light of the reason that brought the rule as, for example, "cash," "bills payable," and into existence. It has been frequently said, the like, is payable to bearer, are based upon and in some countries it is held, that there the idea that the maker, although knowing is a difference in meaning between an instruin one case that the payee is fictitious, and ment payable "to the order of A.,” and one therefore cannot indorse, and in the other payable "to A. or his order," and that becase knowing that the impersonal payee is cause of such difference an instrument payneither a natural nor an artificial person, able "to the order of A." is not deemed payand therefore is not a payee who can indorse, able to A., but is payable only to his order, intends by the use of the word "order" to and that therefore the instrument is not make the instrument negotiable, and, since negotiable until the indorsement is made. that intention cannot be effected by the in- The statute takes this subject out of the dorsement of the fictitious or nonexisting field of controversy, and by force of secpayee or by the indorsement of the inan- tion 7800, Or. L., if a note is payable "to imate payee, the intention will in each of the order of A.," he can sue on it withsuch two instances be given effect by treat-out indorsing it exactly as he could sue on ing the instrument as one payable to bearer. a note payable "to A. or to his order"; for, The reason upon which these two rules are in contemplation of law, so far as the quesbased cannot be said to be present in the tion of the necessity of indorsement is coninstant case; and, the reason failing, the cerned, one phrase gives to the payee the

(220 P.)

same right as the other phrase. When the, pearing upon its face; for we know by obserstatute is read in the light of its reason, we vation and experience that when a blank

check is filled out in the manner indicated the signer of the check usually intends to make the instrument payable to bearer and transferable by delivery, and gives but little, if any, attention to the printed words "Pay to the order of." In the instant case, however, Kerley deliberately wrote the words "Pay to the order of the bearer" at the same time with the typewriter, and it cannot on any reasonable ground be said that he intended that the words "the order of" should be ignored.

cannot say that the disputed instrument should be viewed as though it read pay "to the bearer or his order," and after so doing then say the words "or his order" can be eliminated and ignored, and finally hold that what is left makes the instrument payable to bearer, and therefore negotiable. 8 C. J. 173; Story on Promissory Notes, § 36; Robinson v. Wilkinson, 38 Mich. 299. It is simply impossible to ignore or to eliminate the words "the order of" from the writing. The intention of the makers is made plain. The manifest purpose of the signers was to make [2] The next inquiry is: Does the paper the paper payable to order, and the word meet the requirements prescribed for instru"bearer" was used to indicate the payee to ments payable to order? If the payee of a whose order the instrument would be pay- note payable to order is neither named nor able. On no theory can the paper be treat- otherwise indicated with reasonable cered as one payable to bearer and transferable tainty it is not negotiable, because it lacks by delivery without ignoring the words "the an essential prescribed by section 7800, Or. order of"; and that cannot be done without L. The primary purpose of the first sentence defeating the recorded intention of the sign-in section 7800, Or. L., is to make it plain ers. The fact that the word "bearer" is that the rights accruing to A. when he holds used does not conclusively make the instru- a note payable "to the order of A." are, as ment transferable by delivery. An instru- previously explained, the same, so far as the ment payable "to the bearer, A.," is not nego- necessity of indorsement and the right to tiable, because the word "bearer" does no sue are concerned, as if the note read "to more than to describe A., and the paper is A. or his order." The last sentence of the merely the equivalent of a writing payable section, however, is directly applicable; for "to A." Warren v. Scott, 32 Iowa, 22; Ogden, this sentence commands that, when an instruNeg. Inst. 41; 8 C. J. 172. We therefore con- ment is payable to order, "the payee must be clude that the paper in controversy is not a named or otherwise indicated with reasonnote payable to bearer within the meaning able certainty." This is not a new requireof sections 7801 and 7822 Or. L., and that ment, as the rule has always been that the if it is a negotiable instrument at all it is person to whom the note is payable must be one payable to order. Banks issue to their indicated and made known with reasonable customers blank checks which are generally- certainty upon the face of the note; and this printed in one of two forms: One with the rule applies to all negotiable instruments, printed words "pay to the order of," follow- and includes not only paper payable to beared by a blank space in which is to be writer and transferable by delivery, but also ten the name of the payee; and the other paper payable to order and transferable by with the printed words "pay to" followed by indorsement. Story on Promissory Notes, § a blank space in which is to be written the 40; Norton on Bills and Notes, 59; Selover on name of the payee followed in turn by the Neg. Inst. (2d Ed.) 81; Tiedeman, Commerprinted words "or order." Frequently a de- cial Paper, § 17; 1 Daniel on Neg. Inst. (6th positor, when using one of such blanks, Ed.) § 99; Eaton and Gilbert on Commercial writes merely the word "bearer" to indicate Paper, 228. the payee, and does not draw a line through the printed words, so that the check when it comes to the bank reads, "Pay to the order of bearer," or, "pay to bearer or order." In the case of the check which reads "pay to bearer or order" no difficulty is encountered because the instrument is in the alternative, and may be treated as a check payable to bearer and transferable by delivery. While it is not necessary to decide whether in the case of the check which reads "Pay to the order of bearer" the instrument is to be treated as a check payable to order, and transferable by indorsement, or as one pay able to bearer and transferable by delivery, it is not inappropriate to state that possibly it should be treated as one payable to bearer and transferable by delivery, because of the circumstances attending the paper and ap

The word "bearer" alone and of itself meets the requirements of certainty as to the payee. The word "bearer" means the person in possession of the bill or note; and, when, therefore, a note payable to a payee designated as "bearer" is issued to a person, whether natural or artificial, it is in truth delivered to a person in being who is ascertained at the time of issue. Ogden, Neg. Inst. § 52; 8 C. J. 172. Under the law merchant the word "bearer" measured up to the requirements of the general rule of certainty; the law recognized the word "bearer" as a term of certainty as to the payee. It was not necessary under the law merchant to designate a person by his name, but it was sufficient if from the language used the person could be ascertained. In 8 C. J. 171, the rule is stated thus: