Case ID: ohio-st_15/html/0515-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John F. Seymour & Co. v. Thomas Mickey.
    1. It is the settled law of this state, that where a person who is not a party, writes his name, in blank, on the back of a promissory note, at the time of its execution and delivery, the prima fade presumption is, that he is a maker of the note, and he may, accordingly, be treated as a surety.
    2. This ordinary presumption may, however, be rebutted, by parol evidence of a different intention and agreement of the parties; to which, when proved, a controlling effect will be given.
    3. Where the design of such indorsement, in blank, is to give to the payees additional security for the payment of the note, parol evidence tending to limit the liability of such indorser, will be construed, if possible, so as not to defeat the general intention.
    4. Therefore, where A., as a security, on behalf of the maker, to the payees of the note, at the time of its execution writes his name on the back thereof, having previously-refused to become a joint maker, and having stated that he" would assume only the obligations of an indorser; he will be regarded, at least, as a conditional guarantor; and his liability to the holder of the note, like that of an indorser to an indorsee, will be fixed by demand and notice.
    §. If, in such a case, the holder of the note, subsequently, and without authority, writes over the name of A. a guaranty of payment and waiver of demand and notice, A. will not thereby be discharged from the obligations of his contract. The unauthorized portion of such writing may, at any time be canceled; or it will be disregarded, and the actual contract will be enforced.
    Error to the district court of Richland county.
    The original action in this case was brought by the present plaintiffs, against one Leyman and the defendant Mickey, upon a promissory note which reads as follows :
    
      “$200. Mansfield, Ohio, October 7,1854.
    “ Three years after date I promise to pay to the order of Mitchell, Harshbarger & Co., two hundred dollars, at-■with interest after six months, value received.”
    [Signed] “ H. Leyman.”
    On the back of the note were the following indorsements:
    
      “ I guarantee payment on the within, and waive demand and notice.”
    [Signed] “ Thomas Mickey.”
    “ Pay to the order of J. E. Seymour & Co. or their attorneys.”
    [Signed] “B. H. Williams,
    
      Assignee of Mitchell, Harshbarger Oo.”
    
    The petition stated, in substance, that at the time this note was signed by the maker, and before it was delivered to the payees, the defendant, Thomas Mickey, indorsed on it his name in blank, for the consideration upon which the note was given; and that it was then delivered to said Mitchell, Harshbarger & Co. That, shortly afterward, one of the members of said firm of Mitchell, Harshbarger & Co. wrote, over the signature of Mickey, the guaranty now appearing on the back of the note. That afterward, and before the maturity of the note, said Mitchell, Harshbarger & Co. assigned and transferred it to one B. H. Williams, who afterward, and before maturity, indorsed it to the plaintiffs, for a valuable consideration, who received it bona fide, in the usual course of business, and without notipe that said guaranty had been written over Mickey’s signature after the execution and delivery of the note.
    The petition further avers, that payment was demanded of Leyman at maturity, and refused — that, therefore, the note was regularly protested for non-payment, and due notice then and there given to Mickey — -judgment is asked against Leyman and Mickey for the amount of the jiote, interest, and costs of protest.
    Mickey, in his answer, states : That when the note was executed he refused to assume the obligations of a maker, but did assume the obligations of an indorser, and only those of an indorser, and, accordingly, wrote his name on the back of the note as such indorser, without any other consideration than that of accommodating Leyman, all which the original parties to the note well knew. And that the payees of the note, or some person acting under their authority, thereafter, fraudulently, unlawfully, and without authority, defaced, altered and changed his said indorsement, by writing the said guaranty over his name. Whereupon he prays to be dismissed with his costs.
    To this answer the plaintiffs originally demurred; and the questions of law presented by the demurrer, were brought before this court, by the reservation of the district court, to which the case had been appealed.
    This court overruled the demurrer to Mickey’s answer, and remanded the cause to the district court, with leave to plaintiffs to reply, or amend their petition. (Seymour 8¡ Go. v. Leyman ‡ Mickey, 10 Ohio St. Rep. 283.)
    Upon the return of the case to the district court, the plaintiffs filed an amended petition, substantially similar to the original one; but stating in addition thereto, that the consideration of the note and indorsement, on which suit was brought, was the sale and delivery by Mitchell, Harshbarger & Oo., of a stock of goods and merchandise, to the said Leyman, and that, shortly after the execution of said note, the guaranty indorsed thereon was written over the blank indorsement of Mickey, by one of the clerks in the employ of Mitchell, Harshbarger & Oo.
    Mickey filed an amended answer, substantially the same as his former one, with the additional statement, that Mitchell, Harshbarger & Oo., having failed in business, assigned their property to the said B. Williams for the benefit of their creditors, and delivered said note to him without indorsement; and he also denied that the plaintiffs received said note in ignorance of the fact that said guaranty had been written over his signature subsequently to the execution of the note.
    To this amended answer, the plaintiffs replied in substance as follows:
    They deny that Mickey’s liability, arising from the writing of his name on the back ‘of the note, at the time of its execution, was limited to that of an indorser; and say, on the contrary, that it was one of the stipulations of the contract for the sale.of the goods to Leyman, that Mickey should become bound with Leyman, to the vendors,'for the price of said goods, of which Mickey had full notice, and placed his name on the note in pursuance of said agreement, and for the purpose of securing the payment thereof, to said Mitchell, Harshbarger & Co. They deny that there was any alteration of Mickey’s undertaking, fraudulent or otherwise; and say that the blank was filled, as stated in the petition, without any fraudulent intention or purpose.
    Upon the issues of fact thus made, the cause was submitted to the court, without the intervention of a jury; and the court having heard the evidence adduced by the parties, found, that the plaintiffs are the bona fide owners and holders of the promissory note set forth in the petition, as therein alleged. The court further found it to be true, as alleged in the answer of Mickey, that he had agreed to assume only the obligations of an indorser upon the said promissory note; and that the payees had never, by written indorsement, transferred said note to any third person, so as to fix said Mickey’s liability, under said indorsement, and therefore, no liability ever arose thereon, against the said Mickey, to 'the said payees, nor to the said plaintiffs, and, for this reason, the court found that Mickey was not indebted to the plaintiffs, as alleged in their petition.
    Plaintiffs, thereupon, moved the court so set aside the finding and grant a new trial, for the reason that such finding was against the evidence and the law of the case. This motion was overruled, the plaintiffs excepting thereto, and judgment was entered in favor of Mickey, which plaintiffs now seek to reverse.
    All the testimony offered in the case is incorporated in a bill of exceptions, and is stated in the opinion of the court, so far as is material to the questions arising in the case.
    
      Curtis § Scribner, for plaintiffs in error.
    
      Burns § Biclcey, for defendant in error.
   Scott, J.

It is.the well-settled law of this state (whatever the decisions may have been elsewhere), that the mere indorsement, upon a note, of the name of a stranger, in blank, is prima facie evidence of a guaranty. But, if it be shown, that such indorsement was made at the time of the execution of the note, and the party making it has not prescribed the limits of his responsibility, he authorizes the holder to regard him as a maker, and he is to be treated simply as a surety. These ordinary presumptions may, however, be rebutted by parol proof of a different intention and agreement of the parties. A controlling effect will be given to-the intention of the parties when clearly shown. Bright v. Carpenter & Schuer, 9 Ohio Rep. 139; Champion & Lathrop v. Griffith, 13 Ohio Rep. 228; Robinson v. Abell, 17 Ohio Rep. 42; Greenough v. Smead, 3 Ohio St. Rep. 415.

The present case comes before us in an aspect quite different from that which was presented for our consideration heretofore, when the case stood on demurrer to the answer of Mickey, 10 Ohio St. Rep. 283. The answer of Mickey was then regarded as alleging, in substance, that he had, at the time of indorsing the note, expressly limited his responsibility to that of a second indorser. And this fact, being admitted by the demurrer, it was held that no liability could attach to Mickey, under this limitation, without the prior written indorsement of the payees. But, the subsequent pleadings of the parties, present an issue as to the fact of this limitation of the indorser’s liability, and the finding upon this issue of fact, must, evidently, go far to settle the conflicting claims of the parties. On this issue, the district court found in favor of Mickey; that he had assumed only the liability of an indorser; and, of course, that of a second indorser; for it was further found, that, in the absence of a written indorsement, by the payees, which might give Mickey the position of a second indorser, he could not be held liable.

Was this finding clearly against the evidence in the case? If it was, that court erred in overruling the motion for a new trial; if it was’not, we ought not to disturb it.

It may be sufficient for all the purposes of the case, to refer only to the testimony of Mickey himself, and that of the witness Leyman, whom he introduced. There is no controversy, but, that the note in question, was given in part payment of a stock of goods, sold on a credit, by Mitchell, Harshbarger & Co. to H. Leyman, in the fall of 1854. The vendors declined to part with the goods, and trust to the sole responsibility of Leyman for payment. They required security upon the notes which were to be given for the purchase money; and Mickey was applied to, by Leyman, to become his surety. Mickey’s own testimony in regard to the transaction, is as follows: “ I remember of Leyman coining to me, and asking me to become Ms surety to.Mitchell, Harshbarger & Co. for the goods. I told him I would indorse for him. Afterward, Mitchell, or Harshbarger (I think Harshbarger), brought the notes up to my store. They were written, ‘we, or either of us.’ I refused to sign them; said I had not agreed to sign the notes, as principal; that I was no party to the sale; that I had agreed to indorse for Leyman. Hold them (Mitchell, Harshbarger & Co.) to draw the notes payable to them, and I would come down in the evening and sign. I said I would be liable as an indorser, and as indorser only. In the evening I went down — the notes were drawn — they were signed by Mickey, and I put my name on the back. There was nothing said, at that time, about the character of my liability. I suppose it was all understood in .the previous conversation, and nothing more was said about it.”

Leyman’s testimony, in' the main,, corroborates that of Mickey. After stating that Mickey refused to sign the first notes, which were.drawn “we, or either of us,” he states the reason assigned by Mickey for his refusal, as follows: “ Mickey said that would go to show that he had an interest in the purchase, which wa3 not true; he was willing to sign any note making him an indorser only.”

Now, without recurring to the evidence offered by the plaintiffs, we must say, that we can not read this testimony of the defendant Mickey himself, in the light of the undisputed circumstances of the case, without a clear and full conviction, that it was the intention, and understanding of all the,parties to this transaction, that Mickey, by his indorsement of the note, should become responsible to Mitchell, Harshbarger & Co., the payees, for any default in its payment by Leyman, at maturity. The note-was not accommodation paper; it was executed upon a valuable consideration, as between the immediate parties to it; it was intended as the evidence of an actual indebtedness by the maker to the payees; and there is no evidence that it was intended for discount. Indeed, the evidence offered by the plaintiffs proves the contrary. The payees of the note were not satisfied with Leyman’s responsibility, and required security. This was well known to Mickey, for he says that Leyman came to him, and asked him “to become his surety, to Mitchell, Harshbarger & Co. for the goods;” and he expressed his willingness to do so, by indorsing for him. True, he subsequently refused to sign the note, as a joint and several maker with Leyman, because, as he says, “-he had not agreed to sign the notes as principal; that he was no party to the sale;” or, as Leyman testifies, because “ that would go to show that he had an interest in the purchase, which was not true.” He did not object to becoming a surety to the payees, for Leyman, but, as he claims, said he would do so, by indorsing for . him. This language must have been used loosely. A witness for the plaintiffs (Mr. Harshbarger), who participated in this transaction, testifies, that he “ did not know the difference between an indorsor and a guarantor, and has no recollection of any thing being said, to call his attention to the difference.” It is not probable that Mickey was much better informed on the subject. Eor the idea of his becoming a surety for the maker to the payees of the note, by a technical indorsement, is simply absurd. The only rational explanation of his language is to be found in the fact, that it was not used or understood by the parties in a strict or technical sense. . As the paper stood, at the time, his indorsement of it could operate as a security to the payees, only by giving him the position of a guarantor or surety. The most favorable view for Mickey, which can reasonably be taken of the whole transaction, under his own testimony, is, that while he refused to become primarily liable as a joint maker of the note, he did agree to become responsible to the payees, for a default of payment by the maker at maturity, provided payment should be demanded at maturity, and notice of the default be duly given to him.

This view of the evidence, would make Mickey’s contract one of conditional guaranty, and secure to him the rights of an indorser, in respect to demand and notice. And that the plaintiffs have complied with the conditions, which such a guaranty would impose upon them, by due protest for nonpayment, and notice to Mickey, is not controverted.

It is unnecessary to inquire whether the plaintiffs, as the Iona fide indorsees of this note, before maturity, and without notice, under the indorsement of B. H. Williams, who was the general assignee of the payees, can claim to hold it exempt from such defenses as might be set up in a suit between the original parties; for, we have found the defense unsustained by the evidence.

It is further claimed, on behalf of Mickey, that the writing of the guaranty, and waiver of demand and notice, over his signature, amounts to a fraudulent alteration of his contract, and discharges him from all liability. But this position can not be sustained. There was here no written contract to be altered. Mickey’s name was indorsed in blank, and whether he thereby became bound as an indorser, a maker, or a guar antor of the note, must depend on the agreement of the parties, express or implied from the circumstances. Now, conceding that there was no authority to write over this blank signature a waiver of demand and notice, yet the proof shows that no fraud was in fact intended; there is no evidence tending to prove the contrary; and we think it clear, that a mistake made by writing over such a signature, a contract not authorized by the circumstances, will not discharge either party from the obligations of the actual contract. That such mistake may be at any time corrected, by canceling the unauthorized writing, and substituting therefor, such terms as will truly express the contract of the signer, or the unauthorized writing may be disregarded, and the actual contract enforced. To this point the authorities, cited by counsel for plaintiffs, are full and explicit. Josselyn v. Ames, 3 Mass. 274; Tenney v. Prince, 4 Pick. 385; Riley v. Gerrish, 9 Cush. 106; Sylvester v. Downer, 20 Verm. 355.

We are satisfied that the finding of the district court is clearly not warranted by the evidence in the case, and that the court therefore erred, in overruling the motion for a new trial.

Judgment of district court reversed, and cause remanded for new trial.

Brinkerhoee, C.J., and Day, White and Welch, JJ., concurred.