Case ID: ohio-np-ns_26/html/0483-01.html
Source: Caselaw Access Project
Author: {"author": "Blosser, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CONSIDERATION FOR THE SIGNING OF A NOTE BY AN ADDITIONAL PARTY.
    Common Pleas Court of Fayette County.
    Os Briggs v. Rufus W. Hutson, The Fayette County Bank et al.
    Decided, March, 1927.
    
      Bills and Notes — Claim that the Signing of a Note by an Additional party was under Duress — Question as to the Consideration for signing when it was Subsequent to Delivery.
    
    When a promissory note is signed by an additional party pursuant to an agreement ^betweeen the original parties to such note made in advance of its delivery, and after it has been executed and delivered, and the consideration has passed between the original parties, it is binding on the additional party, although no new consideration has passed.
    
      John P. Phillips and Vorys, Sater, Seymour & Pease, for Rufus W. Hutson.
    
      Bush & Clyburn for the Fayette County Bank.
   Blosser, J.

This is a hearing on the motion for a new trial and a re-consideration of the issues between Rufus W. Hutson and the Fayette County Bank.

The petition filed in this case by the plaintiff, Os Briggs, sets up a number of judgments and is in the nature of a creditors bill, seeking to subject the property of the defendant Rufus W. Hutson, to the payment of the various judgments stated and to marshal the liens according to their priorities.

The Fayette County Bank obtained a judgment against Rufus W. Hutson and Homer Hutson for $6,000 and interest on a cognovit note purporting to be signed by them.

The pleading of Rufus W. Hutson admits he signed the six thousand dollar note to the Fayette County Bank, but claims that the same was done under duress and without consideration. This is denied by the bank.

The evidence discloses that both Homer Hutson and his father, Rufus W. Hutson had been customers of the Fayette County Bank for a number of years. At the time in question Homer Hutson appeared at the bank and negotiated a loan for $6,000, with the agreement and understand:ing that he and his father, Rufus W. Hutson were to be the makers of the note to the bank. Homer Hutson signed his own name to the note and forged the' name of his father immediately below his own signature and presented the same to the bank and received credit for $6,000. It is claimed that Homer Hutson was authorized to sign his father’s name. The court adheres to -its former decision that Homer was not authorized to sign his father’s name and that the name of Rufus W. Hutson appearing first upon said note was an absolute forgery.

The next day after the note was negotiated Rufus' W. Hutson appeared at the bank. What took place between him and the cashier, Mr. Howatt, is in dispute. During their conversation the note in question was presented to Rufus W. Hutson and he pronounced his name on the note to be a forgery. Mr. Hutson claims that Mr. Howatt threatened to prosecute his son for forgery if he did not assume or sign the same. This is denied by Mr. Howatt. The next day Rufus W. Hutson appeared at the bank and signed .his name immediately below his name which had been forged by his son Homer. Rufus W. Hutson claims that his signature to the note was obtained solely through the threats and fear of prosecution of his son; and Mr. Howatt claims that Mt. Hutson’s acts were voluntary and no threats were made.

This being in substance all the testimony upon the issue of duress the court finds that duress has not' been proven by the degree of proof necessary, and therefore holds that as far as is shown by the evidence Rufus W. Hutson .voluntarily signed the note.

The most serious issue raised is as to whether or not there was any consideration for Rufus W. Hutson signing the note in question. On the’question of forgery the courts of Ohio have probably gone as far as the courts of any other jurisdiction in holding that a forgery is an absolute nullity and void for all purposes, and that there can be no ratification thereof. Workman v. Wright, 33 O. S., 405; Shinew v. First National Bank, 84 O. S., 297.

In the instant case Homer Hutson, at the time he negotiated the loan agreed to furnish the name of his father upon the note; Upon that promise and agreement the bank parted with its money. Afterward when Rufus W. Hutson appeared at the bank and voluntarily signed his name to the note in question he thereby became bound for the payment of the note, because the original agreement of Homer Hutson to furnish such name, and the bank at that'time parting with its money upon that representation, was a sufficient consideration. Had there been no such agreement on the part of Homer Hutson to furnish the name of his father upon the note, and had Homer not forged his father’s name, but in other words had secured the loan of $6,000 upon his own name only, and after the negotiation of the note and before the same became due Rufus W. Hutson voluntarily had signed his name thereto, then, under such circumstances, there would have been no consideration for Rufus W. Hutson’s signature, and he would not have been bound thereby.

The latter illustration involves the same principle in the unreported case of Grant W. Grove v. E. O. Corbin et al, decided by the Court of Common Pleas of Hancock county (78 O. S., 379), and cited by counsel for the defendant, Rufus W. Hutson. In that case it will be noted that at the time of the negotiation of the note there was no promise or agreement to procure the signature of another surety as is true in the instant case.

The general rule governing such matters is laid down in 8 Corpus Juris, Sec. 392, under the title “Bills and Notes.”

“Where the note and the indorsement are one transaction and simultaneous the consideration for the note is sufficient for the indorsement, whether the indorser is regarded as a guarantor or as a joint maker, and even though the indorser did not know the nature of that consideration.
“On the other hand, if the indorsement was made after delivery, a new consideration is necessary unless made pursuant to a prior agreement between the maker and his creditor for such an indorsement.”
“One signing a note, after its execution and delivery and the passing of the consideration between the parties incurs no liability, unless there is a new consideration but a note so signed pursuant' to an agreement made in advance of the delivery, is binding, though no new consideration passed.” Eitel v. Farr et al, 165 S. W. (Mo.), 1191.

At page 1192 the court in its opinion says:

“One who signs a note after it has been executed and delivered and the consideration has passed between the parties, incurs no liability, unless there be k new consideration ; but, where a note is so signed pursuant to a promise or agreement made in advance of the delivery, the act relates back to the inception of the first contract, and no new consideration is required.”
“A surety can not escape liability on the ground that his undertaking was without consideration because he signed the note after its delivery to the payee; the note having been accepted on condition that he should sign it.” Deposit Bank of Sulphur v. Peak, 62 S. W. (Ky.), 268.
“To render a party liable for an obligation already existing between other parties, there must be a new consideration passing at the time, but this doctrine has no application to the indorsement of a note discounted by a bank on condition that such indorsement should be obtained.” Mitchell v. Planters Bank, 27 Tenn., 215.
“A, having executed and delivered to plaintiff his promissory note, which specified no time of payment, at the same time agreed with plaintiff that he would procure B to sign said note as his surety, if at any time plaintiff should deem himself insecure, or should .desire further security. Plaintiff, some months afterward returned said note to A, with the request that he should procure B to sign it. A did thereupon procure B to sign the same as his surety, and afterward re-delivered the note to plaintiff, no new consideration having then passed between the' parties.”
“Held: That B was liable to plaintiff upon the note.” McNaught v. McClaughry, 42 New York, 22.
“M procures a loan of money from H on a promise that B would sign a note with him for the amount of the loan. M delivered his own note, stating that B would sign it; this B did some two years thereafter. In an action upon the note, held, that B was liable; that her signature would be considered as having been placed to the note at its date, and this, although B did not know of the arrangement; that it was sufficient if she signed at the request of M, who had given the assurance.” Harrington v. Brown, 77 New York, 72; Moies v. Bird, 11 Mass., 436.

Other authorities might be cited, but the above are sufficient to illustrate the principle involved.

The court is of the opinion that the bank, having parted with its money upon the promise that Rufus W. Hutson would sign the note in question, and he having signed the note and thus carried out the agreement, the consideration for the same is sufficient and is binding upon Rufus W. Hutson.

For the reasons above enumerated the motion for a new trial will be overruled and judgment may be entered in favor of the Fayette County Bank according to the original decision in this case.