Case ID: ohio-cc-dec_18/html/0720-01.html
Source: Caselaw Access Project
Author: {"author": "\n      ©USTIN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BILLS AND NOTES.
    [Clark (2nd) Circuit Court,
    May Term, 1906.]
    Wilson, Dustin and Sullivan, JJ.
    Harry L. Rockfield et al. v. First Nat. Bank of Springfield, Ohio.
    [The Act op April 17, 1902 (95 O. L. 162), Known as “The Negotiable Instruments Act,” does not Change State Rule op Decision.
    One who places his name on the hack of a promissory note before delivery is a maker or surety, and is not entitled to notice of presentment and nonpayment. The act of April 17, 1902 (95 O. L. 162f] known as “The Negotiable Instruments Act,” does not change the liability of such party as established by the Supreme Court of the state for many years.
    [For other cases in point, see 1 Cyc. Dig., “Bills, Notes and Checks,” §§’ 360-380; §§ 1037-1039. — Ed.]
    [Syllabus by the court.]
    Error to Clark common pleas court.
    Jas. Johnson, Jr., for plaintiffs in error.
    Martin & Martin and Hagan & Hagan, for defendant in error.
   ©USTIN, J.

(Orally.)

The First National Bank, as payee, brought two aotions in the •common pleas court against Rockfield et al., upon two promissory notes •of the defendant railway, on both of which notes the names of defendants, Rockfield and Snyder, appeared on the back as indorsers. Several ■other indorsers were also upon the notes, which were payable at the .bank.

The petition in each ease is in the usual form, and does not aver that these indorsers were notified of any dishonor of the paper, by the maker.

The indorsers above named demurred to- the petitions, and the demurrers were overruled. They then answered, and plaintiff below demurred to the answers, which set up that the defendants named were accommodation signers, and that they had not been notified of the •dishonor of the paper.

The demurrers to these answers raised the same questions as the ■demurrers to the petitions. The demurrers were sustained, and Rock-field and Snyder prosecuted error to this court upon the judgments rendered, alleging that the court erred, first, in overruling the demurrers to the petitions, and second, in sustaining the demurrers to the ■answers.

Highly important and startling questions are thus raised as to the effect of the statute which was passed April 17, 1902 (95 O. L. 162), codifying the law of negotiable instruments in Ohio. It is conceded that up to that time the law was, as announced by several decisions of the Supreme Court, that a stranger to an .instrument, who had signed before delivery of the instrument, his name being upon the back thereof, was, in the absence of any explanation, maker and surety; but it is now contended that he is an indorser, entitled to notice of presentment and nonpayment, and, in the absence of notice, that he is discharged.

This theory of the case presents several ingenious and interesting points, and an examination of the question has been quite entertaining to the court.

We think that the sections which should be considered in determin-ag this question are, first, Rev. Stat. 3173i (Lan. 4961), the subhead )e.ing, “Liability of irregular indorser.” This section reads as fol~ ows:

“Where a person not otherwise a party to an instrument places thereon his signature in blank before delivery, he is liable as indorser in accordance with the following rules:-
“1. If the instrument is payable to the order of a third person, he is liable to the payee and all subsequent parties.
“2. If the instrument is payable to the order of the maker, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer.
.“3. If he signs for the accommodation of the payee, he is liable to all parties subsequent to the payee.”

Therefore, his liability, as here defined, is the same as the maker and surety. It is in exact accord with the holdings of the Supreme Court in Ewan v. Brooks-Waterfield Co. 55 Ohio St. 596 [45 N. E. Rep. 1094; 35 L. R. A. 786; 60 Am. St. Rep. 719], and previous decisions.

Revised Statutes 3173k (Lan. 4963), describes the liability of a general indorser, and that is the subhead to this section, which reads:

“Every indorser who indorses without qualification, warrants to all subsequent holders in due course:
‘ ‘ 1. The matters and things mentioned in paragraphs numbered one, two and three of the preceding section. ’ ’

Said paragraphs one, two and three of Rev. Stat. 3173j (Lan. 4962), which define the warranty where negotiation is by delivery, are as follows:

“1. That the instrument is genuine and in all respects what it purports to be.
“2. That he has a good title to it.
“3. That all prior parties had capacity to contract.”

That implies, of course, that he is an indorser in the regular course, and that it was transferred by the payee or some subsequent indorser. That would be just as the law was before in the case of a party who indorsed after the first delivery.

“And, in addition, he engages that on due presentment, it shall be accepted or paid or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it.”

This describes what was previously known as the liability of a. general indorser, in the course of trade.

Now, let us look at the subdivision on dishonor of paper. Revised Statutes 3174g (Lan. 4986), reads:

“To whom notice of dishonor must be given.
“Except as herein otherwise provided, when a negotiable instrument has been dishonored by non-acceptance or non-payment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or indorser to whom such notice is npt given is discharged.”

It is true that the words there are general; any indorser or drawer shall be given notice. We think that must be read in the light of previous definitions of regular and irregular indorser, and to make the statutes consistent, it can only apply to a general indorser. It will be observed that in Rev. Stat. 3173i (Lan. 4961), the party is not described as an indorser.

“Where a person not otherwise a party to an instrument places thereon his signature in blank before delivery, he is liable as in-dorser in accordance with the following rules: ’ ’

In Rev. Stat. 3173k (Lan. 4963), every indorser, etc., is described as such. In Rev. Stat. 3173i (Lan. 4961), the party described has the liability of an indorser to a certain extent; in the first, he is called an indorser.

Now, Rev. Stat. 3173h (Lan. 4960), has also been commented upon. “When person deemed indorser” is the subhead.

“A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor is deemed to be an indorser unless he clearly indicates by appropriate words his intention to be bound in some other capacity.”

•We think that is not inconsistent with the other section; but if it were, the statute describing the irregular indorser — and Rockfield and Snyder meet the description in this case- — should control, upon the familiar principle that if there is any conflict between a general and a special statute, the special statute governs.

We are unable to see this in any other light than that Rockfield and Snyder come under the description of irregular indorsers in Rev. Stat. 3173i (Lan. 4961), and their liabilities are the same — as before stated, by decisions of the Supreme Court — as makers and sureties.

Some point was made of the fact that the title of the act reads as follows: “To establish a law uniform with the laws of other states on negotiable instruments,” and it is argued that that indicates in itself the intention to change the law on that subject; otherwise there would be no necessity for the act; and the implication is, that the laws of Ohio are different from those of other states, and this act is made to conform to them, thereby showing the legislative intent to change the law; on this subject.

That argument would be quite forcible .if it only applied to the subject of indorsement. Then perhaps there would be an indication that the legislature intended to change the law in Ohio on the subject of the liabilities of an indorser. But, in fact, it includes the whole field of tbe law of commercial paper; and while it does imply an intention to change the law in some respects, and -make it conform with that of other states, there is no indication where the change is to appear. There are pages and pages concerning commercial paper in all its phases; and we get no light from the title as to what is to be changed.

We think that the court did not err either in overruling the demurrers to the petition, or in sustaining the demurrers to the answers, and that the law has not been changed by the statute referred to, and the judgment, will therefore, be affirmed.

Wilson and Sullivan, JJ., concur.