Case ID: wis_92/html/0517-01.html
Source: Caselaw Access Project
Author: {"author": "NewmaN, J.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Kiel, Respondent, vs. Choate and another, Appellants.
    
      February 19 —
    March 10, 1896.
    
    
      Promissory notes: Liability of indorsers as between themselves: Evidence.
    
    As between two indorsers in blank of a promissory note,.one of whom has paid it and sued the other for contribution, it may be shown by oral evidence that they were accommodation indorsers and agreed, at the time, that as between themselves each should be liable for one half.
    Appeal from a judgment of the circuit court for Winnebago county: Geo. W. BueNell, Circuit Judge.
    
      Affirmed.
    
    Oh the 6th day of April, 1888, the Ingalls, White Rapids & Northern Railway Company executed three several promissory notes, of $1,000 each, to J. K. Kiel. Kiel indorsed them in blank, and under his indorsement was the? blank indorsement of Choate dk Bray. In this condition they were negotiated to the First National Bank of Menominee, Mich. Kiel paid the notes to the holder, and brings this action against Choate'do Bray for contribution. He alleges that both indorsements were for the accommodation, of other persons, J. H. Kiel and Peter Grattan, and that at the time of indorsement it was agreed between them that,, as between themselves, Kiel should be liable for one half, and that Choate db Bray should be liable for the other half. The main contention on the trial was whether it was competent to show this agreement between tbe indorsers, as to their liability as between themselves, by oral evidence. It was urged for the defendants that the admission of such evidence was in violation of the rule that oral evidence is incompetent to contradict or vary the terms of a written contract. The court received the oral evidence. The trial resulted in a judgment for the plaintiff, from which this appeal is taken.
    Eor the appellants there was a brief by Hooper do Hooper, and oral argument by Moses Hooper.
    
    To the point that evidence of a conversation between Kiel and Choate prior to the indorsement is inadmissible to modify the subsequent indorsement, they cited Charles v. Denis, 42 Wis. 56-58; Smith v. Caro, 9 Or eg. 278, 287; Johnson v. Ramsa/y, 43 N. J. Law, 279; Martin v. Cole, 104 U. S. 30, 37; Eaton v. McMahon, 42 Wis. 484; Chaddock v. Vanness, 35 N. J. Law, 517; Doolittle v. Ferry, 20 Kan. 230; Farr v. Ricker, 46 Ohio St. 265; Johnson v. Clover, 121 Ill. 283, 286; Courtney v. Hogan, 93 id. 101, 104; Moorman v. Wood, 117 Ind. 148; Rodniey v. Wilson, 67 Mo. 124; Dale v. Gear, 38 Conn. 16; 2 Parsons, Notes & B. 24; Liebscher v. Kraus, 74 Wis. 387; Abrey v. Crux, L. R. 5 C. P. 37; Young v. Austen, 4 id. 553; Adams v. Wordley, 1 Mees. & W. 374.
    For the respondent there was a brief by Eaton <& Weed, and oral argument by M. H Eaton.
    
   NewmaN, J.

It was settled for this court by Cady v. Shepard, 12 Wis. 639, that, where a note is indorsed by a payee and a third party, the legal inference from the instrument itself that the payee is the first indorser may be explained by oral evidence of the facts and circumstances under which the indorsement was made, in order to show the proper order of liability among the indorsers.y'The in-dorsement itself is not such a written contract between the indorsers themselves as cannot be explained by oral evidence. Between the indorsers, the presumption no doubt is that, as ■ between themselves, their liability is in the order in which their names appear upon the paper. But that is a fact which is collateral to the contract of indorsement, and may ■be proved and the presumption rebutted by oral evidence. The authorities are nearly or quite uniform. 2 Rand. Com. Paper, §§ 140, 741, 908, and cases cited; 1 Daniel, Neg. Inst. (3d ed.), §§ 703, 704, and cases cited; 2 Whart. Ev. *.(3d ed.), §§ 942, 1060, and cases cited in note 1; 18 Cent. Law J. 382; Browne, Parol Ev. § 83, and cases cited. It ■ does not conflict with .the rule that parol evidence is inadmissible to contradict or vary the terms of a written contract. No doubt, within this rule, a blank indorsement is to be treated as a written contract. But the blank indorse- • ment forms a new and independent - contract between the •.indorser and indorsee. It implies a promise that the paper is due and payable according to its tenor; that the maker •or previous indorsers will pay it at maturity, when duly 'Called upon and notified; and that the indorser will pay the ..same if they do not. The promise is made to the immediate ■.indorsee not only but to each subsequent indorsee. It is . an agreement between the indorser and subsequent holder of the note. But it does not import an agreement among the indorsers themselves as to the order or manner of their Liability. The indorser is liable alone on his contract of in-dorsement, and not jointly with the maker on the note .itself. Boyd v. Beaudin, 54 Wis. 193, 201; 1 Daniel, Neg. Inst. (3d ed.), § 669; 2 Parsons, Notes & B. 23.

The obligation of one indorser to contribute to one who has paid the note does not arise from any breach of the con-ttract of indorsement, but only from its fulfillment. It is not ■an action upon the contract of indorsement at all, but is a liability which springs collaterally from it. It arises out of an agreement between the indorsers themselves. In the ab•-■sence of evidence of a special agreement, the law implies that they have agreed to be liable severally, in the order in* which their names appear upon the paper. But this presumption is of little weight in the presence of evidence showing an actual agreement. Such evidence does not contradict or vary the contract of indorsement, which is only collaterally in issue. Browne, Parol Ev. 18; Abb. Tr. Ev. 7, 294 1 G-reenl. Ev. § 89; Phillips v. Preston, 5 How. 278. The-charge was correct in substance, and fairly submitted the-question to the jury.

By the Court.— The judgment of the circuit court is affirmed.