POWELL POWELL v. GREENLEAF CURRIER | 104 Vt. 480 | 1932 | Slack, J.

Summary: Two instruments contained two references to extrinsic contracts: 1) “for and in consideration of a contract and
agreement” and; 2) “acknowledge the receipt of a true copy of this entire agreement.”
Issue: W/N these instruments are negotiable?
H: GenRule – to destroy negotiability, reference to a collateral contract must show that the obligation to pay is burdened with
the conditions of that contract.
For an instrument to be negotiable, it must contain an unconditional promise or order to pay a sum certain in money.
Negotiability of these instruments is not affected by either of these references. The promise to pay is not subject to the
extrinsic agreement or any contingency, but is absolute and unconditional. 1 st reference – merely a recital of the consideration
and does not impose additional liability. 2 nd reference – mere acknowledgment by the signers of the receipt of a true copy of
the agreement.

FACTS:
Suit to recover balance on two instruments (identical except for date) with the following stipulations:
1. For and in consideration of a contract and agreement xxx we are entitled to the use of said company's system of
collections
2. For $150 in 12 equal monthly payments at $12.50/month. Upon default, whole amount becomes due.
3. Last line of contract: “we hereby acknowledge the receipt of a true copy of this entire agreement.”

ISSUE: W/N instruments are negotiable? YES

HELD:
 Negotiability of instruments is determined by the language of the instruments not by the inspection of the extrinsic
agreements to which they refer.
 G.R.: wherever a bill of exchange or promissory note contains a reference to some extrinsic contract in such a way as
to make it subject to the terms of that contract, the negotiability of the paper is destroyed (First Nat’l Bank in Salem
v. Morgan)
 But it is also well settled that negotiability of a bill or note is NOT affected by a reference which is simply a recital of
the consideration, 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.
 In short, to destroy negotiability, the reference to a collateral contract must show that the obligation to pay is
burdened with the conditions of that contract.
 Two references to extrinsic contracts:
“For and in consideration of a contract and agreement”
- Nothing more than a recital of the consideration which does not affect negotiability
- Nor is negotiability affected by the fact that it appears that they were given for or in consideration of service to be
thereafter performed by the payee. (Siegal v. Chicago Trust Savings Bank)
- Mere fact that the consideration is recited in it, although it may appear that it was given for an executory contract or
promise on the part of the payee, will not destroy its negotiability. Exception: it appears through the recital that it
qualifies the promise to pay, and renders it con- ditional or uncertain, either as to the time of payment or the sum to be
paid.
“We hereby acknowledge the receipt of a true copy of this entire agreement.”
- Mere acknowledgment by the signers of the instruments of the receipt of a true copy of the entire agreement.

Other stuff1

1
Defendant: instruments are bilateral, not promissory notes, and refers to the extrinsic agreements
Court: Instruments are not subject to agreement therefore terms are immaterial
Defendant: Instruments are not negotiable because they provide that first payment made upon signing, and an instrument to be negotiable
must be payable on demand or at a fixed or determinable future time.
Court: Payment is payable at a determinable future time within the meaning of the statute which is upon the signing of the instrument
Lopez, Catherine Case #2