Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1863-06-11
Decision of the Supreme Court, affirm.
ing the Validity OF Farm Mortgages.

Decision of the Supreme Court, affirm
ing the Validity OF Farm Mortgages.
OPINION BY JUSTICE PAINE
Daniel P. crosby, Respondent against Samuel l.
Roub and others, Appellants.
This action Was ruught to fore c'nse whai
ID comnOnly called farm morrgage Il
was given 10 the Milwaukee IL Missieslppi
Railroad Company, and the note given in
connection with it, was made payable TO
that company ur order 1t is conceded
that it was transferred to the plaintiff be
fore due, for value, and that the plaintiff
had no notice of any equitable defense
But on the trial, the defendant offered evi
dencs OF defense set up in the answer
founded upon alleged false and fraudulent
representations by the agents of the COM
Pany In procuring the mortgage. This
was excluded on The ground that such
| facts would constitute no defense against
the plaintiff, lie being bona tide holder
| fof value.
This ruling is alleged to be erroneous.
| And it is claimed chat this note never was
transferred to the plaintiff within the rule
OF mercantile law, so rs to transfer the lie
| gal title, and that therefore the equities
| shown in defense. This position is based
| entirely on the mode OF transfer, which
was as follows: The company executed to
| the plaintiff It's own negotiable bond, pay.
able to him or bearer, attached the note to
it, reclting in the bond that they thereby
transferred the note and mortgage to the
plaintiff as security, and that both should
be transferable in connection with the
bond and not otherwise.
The sole question is whether this was
sufficient endorsement OF the note within
the law merchant, to pass the legal title ?
1t must be admitted that the company
did not assume the liability OF indorsers
But this is clearly not necessary TO trans
fer of the note. Thus q payee may in
| dOrse without recourse, which transfers
| the note, though he assume no liability
whatever. So he may transfer the title by
| signing on the back or attached to the
note guaranty of the payment or collec-
ton, which is entirely a different Col tract
from that OF an indorser. And even
though he should fail to biud him.
I self as guarantor, by not complying
with the statute of frauds, there is no
room for doubt that the title to the note
would pass. 10 every case IF a sale OF
negotiable paper, there are two objects to
be accomplished. First, to pass the title
to the purchaser, and second, to fix the
relation OF the vendor to the paper after
the sale. TIE latter may release him from
any liability, or charge him with the or
binary liability of indorser, or with the
absolute liability of a guarantor of pay
ment, or with tie conditional liability OF
guarantor of collection. But it is imlna-
terial which, so far as the accomplishment
OF the first object is concerned. In either
case the name OF the payee on the paper,
| with the intent to pass the title, has that
effect, whatever may be the nature or fate
! of the balance OF the contract. Judge
Bronson, in Miller VS.. CASTOR, I'd Hill,
| 1872, states the fact incidentally, that IA
guaranty az we'll as an Endorsement, may
| have the effect of transferring the legal
| title to the note" There are but few au-
thorities din ectly in point, and those are
somewhat in conflict. They are all cited
in Parsons on Notes and Bills, Vol. 2,
page 1876, Note A. The author gives it as
his opinion that On principle, note trans.
terred by guaranty, remains negotiable,
and those cases which sustain that cor
clusion, ssem founded upon the better
reasoning. II al Endorsement without re.
course transfers the title because the par
ties so intend, an Endorsement with guar
anty should have the same effect, anG that
whether the guaranty as such, stand or
fall. 1t being established then that it is
not necessary TO transfer OF title that tie
vendor should assume the techhical iabil-
ity of endorser, but that the parties may
contract on that subject as they please,
can there be any room for doubt, that i;
the bond Of the railroad company had
been actually written on the back OF the
note, it would have been a sufficient in
dorsement to transfer the title within the
law merchant? | can see none whatever
Stronger language could not be used show
ing al intent to pass the title 10 the note
to be held as collateral security for the
debt evidenced by the bond, and that it
was designed to circulate as negotiable
paper, transferable by delivery with the
bond, which the company must be assum-
ed to have known could not have been
done without being first Endorsed by it
The intent then to pass the title and make
the note transferable by delivery after
wards, as note originally payable to Or
der and duly indorsed by the payee, is be.
yond question. And this contract, like all
others, must take effect according to the
intent of the parties, if it is sufficient in
| law 10 express that intent. And the fact
that the parties contracted for an absolute
liability by thesvendor, evidenced Ivy dis
tinct negotiable instrument on the back of
the one transferred, cannot upon any ra-
| tional principle be held to distinguish the
case, SO far as the mere question OF q trans.
fer Is concerned, from case where they
| contract for no liability, or for the condi-
tional liability of an indorsee, or the abso>
lutte liability of gusrantor. | conclude.
then, that If the bond had been written on
the back OF the note, it would have been
fully sufnclent to pass the legal title within
the law merchant.
The only question remaining is whether
the fact that it was on another paper as-
tached to the note, prevents this effect
This must depend on the question whether
there is any inhexible rule of the mercan-
tile law requiring the Endorsement to be
On the Identical paper on which the note
was originally written. That there is any
such, certainly cannot be maintained. Ali
the cases where the question is raised and
all elementary writers concur Is saying
that an Endorsement may De on another
paper attached to, ard made part OF the
note. Such paper is called an alODge,
and it is true that the usual reason stated
for using such paper is that there Is no
longer room on the note TO make the IN
dorsement. But this does lot mean that
there must be an actual physical imposs
hIItv tn write the jD6Orser,S name on the