Case ID: pin_1/html/0070-01.html
Source: Caselaw Access Project
Author: {"author": "Irvin, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Murdock vs. Arndt.
    Indorser and indorsee—Bona eide holder.—An indorsee of a bill or note, taking it under a parol agreement not to charge bis immediate indorser, cannot recover against such indorser, though the indorsement be unqualified; but such agreement would be no defense against a subsequent dona fide indorsee or holder without notice thereof.
    ERROR to the District Court for Brown County.
    Assumpsit brought by Murdoch against Arndt to recover against Mm as indorser of a promissory note for seven hundred dollars, made by Jones, Clark & Co. to Arndt or order on demand, and by him indorsed to S. W. Murdock, who indorsed the same to the plaintiff. The defendant pleaded the general issue.
    At the trial, after the plaintiff had rested his case, the defendant called David Jones as a witness, and offered to prove that Arndt sold the note to B. W. Murdoch on the responsibility of Jones, Clark & Co., the makers. This offer was objected to, but the court overruled the objection, and the witness was permitted to testify that, in June or July, 1839, B. W. Murdoch was at Green Bay; that the note had been put into the hands of witness for the purpose of passing it off for flour ; that he offered to let the said B. W. Murdoch have the note if he was satisfied that Jones, Clark & Co. were good; that said Murdoch said he was satisfied that they were good, and that he would take the note; that Arndt had to indorse it, and it was the understanding between B. W. Murdoch and Arndt that he was to take the note on the responsibility of the makers, and not of the indorser, and that he then told Murdoch that payment of the note had been demanded.
    This evidence was objected to by the plaintiff, and he asked the court to reject it on the ground that parol evidence could not be received to show the intention of the defendant when he indorsed the note, and no such parol agreement could affect the plaintiff, who was an innocent holder of the note by indorsement from B. W. Murdoch ; but the court ruled that the evidence was competent.
    The court instructed the jury that, if the indorsement of the note by Arndt was in pursuance of an agreement that he should not be. responsible, then he was not liable thereon; that B. W. Murdoch, the immediate indorsee of Arndt and all persons claiming under him, were bound by the conditions upon which Arndt parted with the note; that if they believed that the note was indorsed by Arndt after it was due, for the purpose of transferring his interest in it, pursuant to an agreement with the person to whom it was so indorsed, that the makers alone were to be responsible to him, and not the indorser, then the plaintiff could not recover, even though he was the indorsee of such person. The jury found for the defendant, and judgment was rendered accordingly.
    
      
      Martin & Eastman, for plaintiff in error.
    1. Arndt is bound by Ms indorsement, notwithstanding any parol agreement. Byles on Bills, 10, 87, 112; 3 Campb. 57; 3 Wils. 275; 1 Taunt, 347 ; 4 id. 856; 5 East. 10; 2 Atk. 383; 4 East. 57; Chitty On Bills, 62 and note; id. 175, and cases there cited. 2. That payment of the note had been demanded is immaterial as to the plaintiff who had no notice of that fact. 3. If the note was dishonored before indorsement, then the signature of Arndt is an absolute guarantee on his part that the note should be paid. 4. Parol evidence of the transaction between Arndt and Murdoch was inadmissible, unless knowledge of the facts was traced to the plaintiff.
    
      O. Q. P. Arndt, for defendant in error.
   Irvin, J.

On the trial of this cause the court charged the jury that the agreement made between John P. Arndt and his indorsee respecting his liability was obligatory upon his immediate indorsee, and all persons claiming under him. If the plaintiff in this case be a bona fide holder for a valuable consideration from the immediate indorsee of defendant, without notice of that agreement (which was a fact for the jury to determine), then the court erred. This the court by its charge took from the jury, and the judgment should be reversed.

There was no error in permitting David Jones to testify as a witness to prove the alleged agreement of the defendant and Ms immediate indorsee.

It is therefore unanimously considered and adjudged, that the judgment of the district court be reversed, with costs, and that the same be certified to said district court, to be further proceeded in, according to law and justice.